<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 22, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------------
WHITMAN CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 2086 13-6167838
(State or Other Jurisdiction (Primary Standard (I.R.S. Employer
of Industrial Identification No.)
Incorporation or Organization) Classification Code Number)
</TABLE>
3501 ALGONQUIN ROAD
ROLLING MEADOWS, ILLINOIS 60008
(847) 818-5000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
STEVEN R. ANDREWS, ESQ.
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
3501 ALGONQUIN ROAD
ROLLING MEADOWS, ILLINOIS 60008
(847) 818-5000
(Name, Address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C> <C> <C>
Richard E. Robbins, Esq. Seth A. Kaplan, Esq. Brian D. Wenger, Esq. Christopher E. Manno, Esq.
Sidley & Austin Wachtell, Lipton, Rosen & Briggs and Morgan, P.A. Willkie Farr & Gallagher
Bank One Plaza, Katz 2400 IDS Center The Equitable Center
10 South Dearborn Street 51 West 52nd Street 80 South Eighth Street 787 Seventh Avenue
Chicago, Illinois 60603 New York, New York 10019 Minneapolis, Minnesota 55402 New York, New York 10019
(312) 853-7000 (212) 403-1000 (612) 334-8400 (212) 728-8000
</TABLE>
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effectiveness of this Registration Statement and the
satisfaction or waiver of all other conditions to the merger (the "Merger") of
PepsiAmericas, Inc. with and into Anchor Merger Sub, Inc., a wholly owned
subsidiary of Whitman Corporation, pursuant to the Agreement and Plan of Merger
dated as of August 18, 2000 (the "Merger Agreement") described in the enclosed
joint proxy statement/prospectus.
------------------------------
If the securities being registered on this form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED(1) PER SHARE(2) OFFERING PRICE(3) REGISTRATION FEE(3)
<S> <C> <C> <C> <C>
Common Stock, $.01 par value................ 33,500,000 $11.12 $372,454,344 $98,328
Preferred Share Purchase Rights............. 33,500,000 (4) (4) (4)
</TABLE>
(1) The number of shares being registered by this registration statement
includes (a) 33,500,000 shares of Whitman common stock that may become
issuable (i) to holders of PepsiAmericas, Inc. common stock by virtue of the
Merger (including any shares to be issued on a contingent basis) or
(ii) pursuant to Section 3.3 of the Merger Agreement, and (b) 1,710,863
shares of Whitman common stock that may be sold pursuant to Section 4.7 of
the Merger Agreement.
(2) Estimated solely for the purpose of calculating the registration fee
required by Section 6(b) of the Securities Act.
(3) The registration fee is based on a purchase price of $14.6125 for each of
the shares that may be sold pursuant to Section 4.7 of the Merger Agreement
and, with respect to all other shares being registered, pursuant to
Rules 457(f)(1) and 457(c) of the Securities Act, $3.5625, which is the
average of the high and low prices of PepsiAmericas, Inc. Class B Common
Stock as reported in the consolidated reporting system on September 18,
2000.
(4) The Whitman preferred share purchase rights initially are attached to and
trade with the shares of Whitman common stock being registered hereby. Value
attributable to such rights, if any, is reflected in the market price of the
associated common stock.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
[DATE], 2000
[LOGO]
Dear Shareholder:
Whitman Corporation has entered into an agreement and plan of merger with
PepsiAmericas, Inc. The transaction will involve a merger of PepsiAmericas with
and into a wholly owned subsidiary of Whitman. We have called a special meeting
of shareholders on [date], 2000 at [time] a.m., local time, at [location]. At
the meeting, we will ask you to approve the issuance of shares of Whitman common
stock as provided by the merger agreement and as described in the attached joint
proxy statement/ prospectus.
The attached joint proxy statement/prospectus describes the transaction in
detail. In its simplest terms, if the merger is completed, each share of
PepsiAmericas common stock will be converted, at the election of the
PepsiAmericas shareholders (other than holders of PepsiAmericas Class A common
stock who perfect their appraisal rights under Delaware law), into:
- $3.80 in cash, subject to increase if the average closing price of Whitman
common stock during the 15 consecutive trading days ending on the fifth
trading day immediately prior to the Whitman special meeting or the
PepsiAmericas special meeting, whichever occurs first, is greater than
$16.0738 per share or decrease if the Whitman average closing price during
the period specified above is less than $13.1513 per share; or
- shares of Whitman common stock with a value of $3.80 (based on the Whitman
average closing price during the period specified above), subject to
increase or decrease under the circumstances described above; or
- shares of Whitman common stock with a value of $2.80 (based on the Whitman
average closing price during the period specified above), plus the right
to receive in the future additional shares of Whitman common stock having
an aggregate value of up to $1.50 (based on the Whitman average closing
price during the period specified above) if PepsiAmericas meets certain
performance levels for the years 2000 through 2002, in each case subject
to increase or decrease under the circumstances described above.
Dakota Holdings, LLC holds approximately 72% of the voting power of the
outstanding shares of PepsiAmericas common stock and has agreed to participate
in the alternative set forth in the third bullet point with respect to all of
its shares.
Although we do not expect that it will become necessary to do so, for tax
reasons, if too much cash consideration is elected, we will provide the
available cash on a pro rata basis to those shareholders electing cash and give
them shares of Whitman common stock for their remaining shares of PepsiAmericas
common stock. We will pay cash in lieu of any fractional shares of Whitman
common stock.
Whitman has also agreed to sell shortly after the closing date of the merger
an aggregate of up to 1,710,863 shares of its common stock at $14.6125 per share
to the PepsiAmericas shareholders who participate in the alternative set forth
in the third bullet point and wish to purchase such shares. Following the
Merger, the Whitman common stock will continue to trade on the NYSE, the Chicago
Stock Exchange and Pacific Stock Exchange under the symbol "WH."
<PAGE>
To complete the merger, we need the approval of the Whitman shareholders for
the issuance of Whitman common stock as described above, which requires the
affirmative vote of a majority of the total votes cast on the matter at the
Whitman special meeting. PepsiCo, Inc. holds, directly or indirectly,
approximately 55 million shares of Whitman common stock, which represents
approximately 40% of our outstanding shares. PepsiCo has agreed to vote its
shares in favor of the issuance of Whitman common stock as described above. In
addition, we need the approval of the PepsiAmericas shareholders on the merger
agreement, which requires the affirmative vote of the holders of a majority of
the voting power of the outstanding shares of PepsiAmericas common stock. Dakota
Holdings holds 4 million shares of PepsiAmericas Class A common stock and
approximately 57 million shares of PepsiAmericas Class B common stock, which
together represent approximately 72% of the voting power of the outstanding
shares of PepsiAmericas common stock. Dakota Holdings has agreed to vote its
shares in favor of the merger agreement, which assures that we will obtain the
necessary PepsiAmericas shareholder approval.
The Whitman board of directors has fixed the close of business on [date],
2000, as the record date for determining shareholders entitled to notice of, and
to vote at, the special meeting or any adjournment or postponement of that
meeting.
The Whitman board of directors has approved the Whitman-PepsiAmericas merger
agreement and recommends that Whitman shareholders vote "FOR" the approval of
the issuance of shares of Whitman common stock as provided by the merger
agreement.
We provide additional information about the merger agreement and the
transactions that it contemplates, including the issuance of Whitman common
stock, in the joint proxy statement/ prospectus attached to this letter. PLEASE
REVIEW THAT DOCUMENT CAREFULLY, INCLUDING SPECIFICALLY THE RISK FACTORS RELATING
TO THE MERGER DESCRIBED ON PAGE 28.
Please sign, date and return the enclosed proxy promptly in the enclosed
addressed envelope, even if you plan to attend the special meeting. If you wish
to change your proxy for any reason prior to the vote at the meeting, you may do
so by submitting another proxy, and your previous proxy will have no further
effect. If you attend the meeting, you may vote in person even though you
previously submitted your proxy. If you do plan to attend the meeting, please
check the appropriate box on the proxy card.
Your vote is important no matter how many shares you own. Please complete,
sign, date and return your proxy promptly.
BRUCE S. CHELBERG
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE COMMON STOCK TO BE ISSUED UNDER
THIS JOINT PROXY STATEMENT/PROSPECTUS OR DETERMINED IF THIS JOINT PROXY
STATEMENT/PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
This joint proxy statement/prospectus is dated [date], 2000, and is first
being mailed to shareholders on or about [date], 2000.
2
<PAGE>
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
---------------------
[date], 2000
To the shareholders of Whitman Corporation:
A special meeting of shareholders of Whitman Corporation will be held on
[date], 2000 at [time] a.m., local time at [location].
The purpose of the special meeting is:
1. To consider and vote upon a proposal to approve the issuance of shares
of common stock, par value $.01 per share, of Whitman as provided by the
Agreement and Plan of Merger dated as of August 18, 2000 among Whitman
Corporation, a Delaware corporation, Anchor Merger Sub, Inc., a Delaware
corporation and a wholly owned subsidiary of Whitman, and
PepsiAmericas, Inc., a Delaware corporation.
2. To transact any other business as may properly come before the special
meeting or any adjournment or postponement of the special meeting.
The Whitman board of directors has fixed the close of business on [date],
2000, as the record date for determining shareholders entitled to notice of, and
to vote at, the special meeting or any adjournment or postponement of the
special meeting.
A complete list of shareholders entitled to vote at the special meeting will
be open to the examination of any shareholder, for any purpose germane to the
special meeting, during ordinary business hours, during the ten days prior to
the special meeting at [insert location in the city where the special meeting is
to be held].
BY ORDER OF THE BOARD OF DIRECTORS,
STEVEN R. ANDREWS
SECRETARY
<PAGE>
[LOGO]
[date], 2000
Dear Shareholder:
We would like to invite you to attend a special meeting of shareholders on
[date], 2000, at [time] a.m., local time, at the Marquette Hotel, 710 Marquette
Avenue, Minneapolis, Minnesota, 55402. At the meeting, we will ask you to
approve the merger of PepsiAmericas, Inc. with and into a wholly owned
subsidiary of Whitman Corporation pursuant to an Agreement and Plan of Merger
dated August 18, 2000.
The attached joint proxy statement/prospectus describes the transaction in
detail. In its simplest terms, if the merger is completed, for each share of
PepsiAmericas common stock (other than shares of Class A common stock whose
holders perfect their appraisal rights under Delaware law), you will receive, at
your election:
- $3.80 in cash, subject to increase if the average closing price of Whitman
common stock during the 15 consecutive trading days ending on the fifth
trading day immediately prior to the Whitman special meeting or the
PepsiAmericas special meeting, whichever occurs first, is greater than
$16.0738 per share or decrease if the Whitman average closing price during
the period specified above is less than $13.1513 per share; or
- shares of Whitman common stock with a value of $3.80 (based on the Whitman
average closing price during the period specified above), subject to
increase or decrease under the circumstances described above; or
- shares of Whitman common stock with a value of $2.80 (based on the Whitman
average closing price during the period specified above), plus the right
to receive in the future additional shares of Whitman common stock having
an aggregate value of up to $1.50 (based on the Whitman average closing
price during the period specified above) if PepsiAmericas meets certain
performance levels for the years 2000 through 2002, in each case subject
to increase or decrease under the circumstances described above.
Dakota Holdings, LLC holds approximately 72% of the voting power of the
outstanding shares of PepsiAmericas common stock and has agreed to participate
in the alternative set forth in the third bullet point with respect to all of
its shares.
Although we do not expect that it will become necessary to do so, for tax
reasons, if too much cash consideration is elected, Whitman will provide the
available cash on a pro rata basis to those shareholders electing cash and give
them shares of Whitman common stock for their remaining shares of PepsiAmericas
common stock. Whitman will pay cash in lieu of any fractional shares of Whitman
common stock.
Whitman has also agreed to sell shortly after the closing date of the merger
an aggregate of up to 1,710,863 shares of its common stock at $14.6125 per share
to the PepsiAmericas shareholders who participate in the alternative set forth
in the third bullet point and wish to purchase such shares.
To complete the merger, we need the approval of the PepsiAmericas
shareholders on the merger agreement, which requires the affirmative vote of the
holders of a majority of the voting power of the outstanding shares of
PepsiAmericas common stock. Dakota Holdings holds 4 million shares of
PepsiAmericas Class A common stock and approximately 57 million shares of
PepsiAmericas Class B common stock, which together represent approximately 72%
of the voting power of our outstanding
<PAGE>
common stock. Dakota Holdings has agreed to vote its shares in favor of the
merger agreement. In addition, we need the approval of the Whitman shareholders
for the issuance of Whitman common stock as described above, which requires the
affirmative vote of a majority of the total votes cast on the matter at the
Whitman special meeting. PepsiCo, Inc. holds, directly or indirectly,
approximately 55 million shares of Whitman common stock, which represents
approximately 40% of the outstanding shares of Whitman common stock. PepsiCo has
agreed to vote its shares in favor of the issuance of shares of Whitman common
stock as described above.
The PepsiAmericas board of directors has fixed the close of business on
[date], 2000 as the record date for determining shareholders entitled to notice
of, and to vote at, the special meeting or any adjournment or postponement of
the special meeting.
The PepsiAmericas board of directors has approved the merger agreement and
the merger, has determined that the terms of the merger are advisable, fair to
you, and, in your best interests, recommends that you vote "FOR" adoption of the
merger agreement.
We provide additional information about the merger and the merger agreement
in the joint proxy statement/prospectus attached to this letter. PLEASE REVIEW
THAT DOCUMENT CAREFULLY, INCLUDING SPECIFICALLY THE RISK FACTORS RELATING TO THE
MERGER DESCRIBED ON PAGE 28.
Please sign, date and return the enclosed proxy promptly in the enclosed
addressed envelope, even if you plan to attend the special meeting. If you wish
to revoke your proxy for any reason prior to the vote at the meeting, you may do
so by submitting another proxy, and your previous proxy will have no further
effect. If you attend the meeting, you may vote in person even though you
previously submitted your proxy. If you do plan to attend the meeting, please
check the appropriate box on the proxy card.
Your vote is important no matter how many shares you own. Please complete,
sign, date and return your proxy promptly.
ROBERT C. POHLAD
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE COMMON STOCK TO BE ISSUED UNDER
THIS JOINT PROXY STATEMENT/PROSPECTUS OR DETERMINED IF THIS JOINT PROXY
STATEMENT/PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
This joint proxy statement/prospectus is dated [date], 2000, and is first
being mailed to shareholders on or about [date], 2000.
2
<PAGE>
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
---------------------
[date], 2000
To the shareholders of PepsiAmericas, Inc.:
A special meeting of shareholders of PepsiAmericas, Inc. will be held on
[date], 2000 at [time] a.m., local time at the Marquette Hotel, 710 Marquette
Avenue, Minneapolis, Minnesota 55402. The purpose of the special meeting is:
1. To consider and vote upon a proposal to adopt the Agreement and Plan of
Merger, dated as of August 18, 2000, among Whitman Corporation, a
Delaware corporation, Anchor Merger Sub, Inc., a Delaware corporation and
a wholly owned subsidiary of Whitman, and PepsiAmericas, Inc., a Delaware
corporation. The merger agreement provides for the merger of
PepsiAmericas into a wholly owned subsidiary of Whitman. In the merger,
each share of PepsiAmericas common stock not owned by Whitman or
PepsiAmericas will be converted, at your election and at the election of
your fellow PepsiAmericas shareholders (other than holders of
PepsiAmericas Class A common stock who perfect their appraisal rights
under Delaware law), into cash or shares of Whitman common stock as more
fully described in the attached joint proxy statement/prospectus.
2. To transact such other business as may properly come before the special
meeting or any adjournment or postponement of the PepsiAmericas special
meeting.
The PepsiAmericas board of directors has fixed the close of business on
[date], 2000, as the record date for determining shareholders entitled to notice
of, and to vote at, the special meeting or any adjournment or postponement of
the special meeting.
A complete list of shareholders entitled to vote at the special meeting will
be open to the examination of any shareholder, for any purpose germane to the
special meeting, during ordinary business hours, during the ten days prior to
the special meeting at PepsiAmericas' offices located at 3800 Dain Rauscher
Plaza, 60 South Sixth Street, Minneapolis, Minnesota 55402.
BY ORDER OF THE BOARD OF DIRECTORS,
BRIAN D. WENGER
SECRETARY
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER...................... 1
SUMMARY..................................................... 6
The Companies............................................. 6
Structure of Merger....................................... 6
Shareholder Approvals..................................... 6
Appraisal Rights.......................................... 7
United States Federal Income Tax Consequences............. 7
Recommendations to Shareholders........................... 7
Opinions of Financial Advisors............................ 8
Interests of Certain Persons in the Merger................ 8
Conditions to the Merger.................................. 10
Termination of the Merger Agreement....................... 10
PepsiCo Shareholder Agreement............................. 11
Pohlad Shareholder Agreement.............................. 12
Regulatory Matters........................................ 12
Accounting Treatment...................................... 12
SELECTED FINANCIAL INFORMATION.............................. 13
Whitman Selected Financial Information.................... 13
PepsiAmericas Selected Financial Information.............. 15
Pro Forma Combined Financial Information (Unaudited)...... 17
Comparative Historical and Pro Forma Per Share
Information............................................. 26
RISK FACTORS................................................ 28
If PepsiAmericas does not exceed its projected performance
levels through the end of 2002, the maximum number of
shares of Whitman common stock to be paid to
shareholders participating in the contingent payment
alternative will not be paid............................ 28
Value of Whitman common stock to be received in the merger
may fluctuate........................................... 28
The value of the consideration to be received may change
if the price of Whitman common stock differs between the
date that the Whitman reference price is determined and
the date a form of consideration is elected............. 29
Contingent payments may not be assigned or transferred.... 29
Shareholders who elect to receive cash may receive stock
for a portion of their shares........................... 29
Integration of Whitman and PepsiAmericas operations may be
difficult............................................... 30
PepsiCo has significant influence on Whitman.............. 30
It will be extremely difficult for a third party to
acquire control of Whitman without the cooperation of
PepsiCo................................................. 30
Whitman depends on supplies and marketing support that
PepsiCo provides on terms within PepsiCo's sole
discretion.............................................. 30
PepsiCo could terminate its bottling agreements with
Whitman................................................. 30
There may be conflicts of interest between Whitman and
PepsiCo................................................. 31
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS.................. 31
THE SPECIAL MEETINGS........................................ 32
Date, Time and Place of the Special Meetings.............. 32
What You Will Vote On..................................... 32
Shareholder Record Dates for the Special Meetings......... 32
Quorum.................................................... 33
Vote Required for Approval................................ 33
Voting Your Shares........................................ 33
Cost of Solicitation...................................... 34
THE MERGER.................................................. 36
</TABLE>
<PAGE>
<TABLE>
<S> <C>
The Companies............................................. 36
Background of the Merger.................................. 38
Recommendation of the Whitman Board and Whitman's Reasons
for the Merger.......................................... 45
Recommendation of the PepsiAmericas Board and
PepsiAmericas' Reasons for the Merger................... 46
Opinion of Whitman's Financial Advisor.................... 48
Opinion of PepsiAmericas' Financial Advisor............... 53
Opinion of PepsiAmericas Special Committee's Financial
Advisor................................................. 58
Certain Financial Projections (Unaudited)................. 63
Certain Litigation........................................ 63
Management Following the Transaction...................... 64
Accounting Treatment...................................... 64
United States Federal Income Tax Consequences of the
Merger.................................................. 65
Antitrust................................................. 68
Appraisal Rights.......................................... 69
Federal Securities Laws Consequences; Stock Transfer
Restriction Agreements.................................. 70
Exchange Procedures....................................... 70
Amendment to Whitman Rights Agreement..................... 71
INTERESTS OF CERTAIN PERSONS IN THE MERGER.................. 72
Indemnification and Insurance............................. 74
THE MERGER AGREEMENT........................................ 75
Structure of the Merger................................... 75
Timing of Closing......................................... 75
Merger Consideration...................................... 75
Proration If Too Much Cash Consideration is Elected....... 77
Anti-Dilution Adjustments to the Merger Consideration..... 78
No Fractional Shares...................................... 78
Election Procedure........................................ 78
Exchange Agent; Procedures for Exchange of Certificates... 79
Treatment of PepsiAmericas Stock Options and Warrants..... 80
Contingent Payments....................................... 80
Option to Purchase Additional Whitman Common Stock........ 84
Representations and Warranties............................ 84
Principal Covenants....................................... 85
Conditions to Completion of the Merger.................... 92
Termination of the Merger Agreement....................... 93
Fees and Expenses......................................... 95
Amendment; Waiver......................................... 95
PEPSICO SHAREHOLDER AGREEMENT............................... 95
Ownership of Whitman Common Stock......................... 95
Conduct by PepsiCo........................................ 96
No Agreements with the Pohlad Group; Dakota Holdings...... 97
Transfers by PepsiCo...................................... 97
Special Meetings Requested by PepsiCo..................... 97
Charter, Bylaws and Rights Agreement...................... 98
Whitman Board Composition................................. 98
Term...................................................... 98
POHLAD SHAREHOLDER AGREEMENT................................ 99
Ownership of Whitman Common Stock......................... 99
Conduct by the Pohlad Group............................... 100
No Agreements with PepsiCo; Dakota Holdings............... 101
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Options................................................... 101
Special Meetings Requested by the Pohlad Group............ 101
Charter, Bylaws and Rights Agreement...................... 102
Whitman Board Composition................................. 102
Term...................................................... 102
THE VOTING AGREEMENTS....................................... 102
PepsiAmericas Stockholder Voting Agreement................ 102
Whitman Stockholder Voting Agreement...................... 104
COMPARISON OF SHAREHOLDER RIGHTS............................ 105
Authorized Capital Stock.................................. 105
Size of the Board of Directors............................ 105
Election of Directors..................................... 105
Vacancies................................................. 106
Annual Meeting of Shareholders............................ 106
Special Meeting of Shareholders........................... 106
Action by Written Consent................................. 107
Advance Notice Requirements for Shareholder Nominations
and Other Business...................................... 107
Amendments to Charter..................................... 107
Amendments to Bylaws...................................... 107
Business Combinations with Interested Shareholders........ 108
Rights Agreement.......................................... 108
STOCK EXCHANGE LISTING; DELISTING AND DEREGISTRATION OF
PEPSIAMERICAS COMMON STOCK................................ 109
EXPERTS..................................................... 110
LEGAL MATTERS............................................... 110
SHAREHOLDER PROPOSALS FOR THE WHITMAN 2001 ANNUAL MEETING... 110
SHAREHOLDER PROPOSALS FOR THE PEPSIAMERICAS 2001 ANNUAL
MEETING................................................... 111
WHERE YOU CAN FIND MORE INFORMATION......................... 112
</TABLE>
ANNEXES
<TABLE>
<CAPTION>
<S> <C> <C>
ANNEX A--Agreement and Plan of Merger
ANNEX B--Opinion of Credit Suisse First Boston Corporation
ANNEX C--Opinion of Salomon Smith Barney Inc.
ANNEX D--Opinion of Chase Securities Inc.
ANNEX E--Section 262 of the Delaware General Corporation Law
ANNEX F--Amended and Restated Whitman Bylaws
ANNEX G--Amended and Restated PepsiCo Shareholder Agreement
ANNEX H--Pohlad Shareholder Agreement
</TABLE>
iii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHY ARE THE COMPANIES PROPOSING THE MERGER?
A: We believe that the merger of the No. 2 Pepsi Cola bottler, Whitman, and
the No. 3 Pepsi Cola bottler, PepsiAmericas, will create a Pepsi Cola bottler
with extensive operations that will better serve the needs of retail customers.
The combined company will have operations in 20 states and territories and five
overseas countries. We also believe that Whitman and PepsiAmericas are a great
strategic fit. Finally, we believe that the merger will create significant
shareholder value over time and enable us to grow and remain competitive in the
consolidating beverage bottling marketplace.
Q: WHAT WILL I RECEIVE IN EXCHANGE FOR MY SHARES OF PEPSIAMERICAS COMMON
STOCK?
A: The consideration you receive in the merger will depend, in part, on the
average closing price of Whitman common stock during the 15 consecutive trading
days ending on the fifth trading day immediately prior to the earlier of the
Whitman special meeting or the PepsiAmericas special meeting. We will refer to
this average as the Whitman reference price.
For each of your shares of PepsiAmericas common stock you may elect to
receive:
- $3.80 in cash, subject to increase if the Whitman reference price is
greater than $16.0738 per share or decrease if the Whitman reference price
is less than $13.1513 per share; or
- shares of Whitman common stock with a value of $3.80 (based on the Whitman
reference price), subject to increase or decrease in value under the
circumstances described above; or
- shares of Whitman common stock with a value of $2.80 (based on the Whitman
reference price), plus the right to receive in the future additional
shares of Whitman common stock having an aggregate value of up to $1.50
(based on the Whitman reference price) if PepsiAmericas meets certain
performance levels for the years 2000 through 2002, in each case subject
to increase or decrease in value under the circumstances described above.
We will refer to these three alternatives as the cash alternative, the stock
alternative and the contingent payment alternative, respectively.
Dakota Holdings holds approximately 72% of the voting power of the
outstanding shares of PepsiAmericas common stock and has agreed to participate
in the contingent payment alternative with respect to all of its shares.
Although we do not expect that it will become necessary to do so, for tax
reasons, if too much cash consideration is elected, Whitman will provide the
available cash on a pro rata basis to those shareholders electing cash and give
them shares of Whitman common stock for their remaining shares of PepsiAmericas
common stock. The proration of cash could occur if the closing price of Whitman
common stock on the date of the merger is significantly lower than the Whitman
reference price. Whitman will pay cash in lieu of any fractional shares of
Whitman common stock.
Q: HOW WILL THE VALUE OF THE CONSIDERATION TO BE PAID TO PEPSIAMERICAS
SHAREHOLDERS CHANGE IF THE WHITMAN REFERENCE PRICE IS GREATER THAN $16.0738 OR
LESS THAN $13.1513?
A: If the Whitman reference price is greater than $16.0738:
- PepsiAmericas shareholders who elect the cash alternative will receive,
for each share subject to that election, cash equal to the Whitman
reference price multiplied by 0.2364, which will be more than $3.80;
- PepsiAmericas shareholders who elect the stock alternative will receive,
for each share subject to that election, 0.2364 shares of Whitman common
stock, which will be worth more than $3.80 (based on the Whitman reference
price); and
- PepsiAmericas shareholders who elect the contingent payment alternative
will receive, for each share subject to that election, 0.1741 shares of
Whitman common stock, which will be worth more than $2.80 (based on the
Whitman reference price), plus the right to receive in the future up to
0.0933 additional shares of Whitman common stock, which
<PAGE>
will be worth more than $1.50 (based on the Whitman reference price), if
PepsiAmericas meets the specified performance levels.
If the Whitman reference price is less than $13.1513:
- PepsiAmericas shareholders who elect the cash alternative will receive,
for each share subject to that election, cash equal to the Whitman
reference price multiplied by 0.2889, which will be less than $3.80;
- PepsiAmericas shareholders who elect the stock alternative will receive,
for each share subject to that election, 0.2889 shares of Whitman common
stock, which will be worth less than $3.80 (based on the Whitman reference
price); and
- PepsiAmericas shareholders who elect the contingent payment alternative
will receive, for each share subject to that election, 0.2128 shares of
Whitman common stock, which will be worth less than $2.80 (based on the
Whitman reference price), plus the right to receive in the future up to
0.1140 additional shares of Whitman common stock, which will be worth less
than $1.50 (based on the Whitman reference price), if PepsiAmericas meets
the specified performance levels.
Q: WILL THE VALUE OF THE CONSIDERATION I RECEIVE CHANGE IF THE PRICE OF
WHITMAN COMMON STOCK DIFFERS BETWEEN THE DATE THAT THE WHITMAN REFERENCE PRICE
IS DETERMINED AND THE DATE I ELECT A FORM OF CONSIDERATION?
A: The dollar amount of the cash consideration will not change, but it may
be greater or less than the value of the Whitman common stock you could receive
under the stock alternative or the contingent payment alternative. The Whitman
reference price will be determined at the end of the fifth trading day
immediately prior to the earlier of the Whitman special meeting or the
PepsiAmericas special meeting. You will have until ten business days after the
completion of the merger to elect the form of consideration that you desire.
Because the value of Whitman common stock may fluctuate between the date that
the Whitman reference price is determined and the date that you make your
election, the value of the cash alternative may be greater or less than the
value of the Whitman common stock you could receive under the stock alternative
or the contingent payment alternative.
Q: WHEN AND HOW CAN I LEARN THE FINAL AMOUNT TO BE PAID UNDER EACH OF THE
CASH ALTERNATIVE, STOCK ALTERNATIVE AND CONTINGENT PAYMENT ALTERNATIVE?
A: Commencing on the first trading day after the determination of the
Whitman reference price, Whitman and PepsiAmericas will post such information to
their websites. You may also access such information by calling [number].
Q: WHAT NEEDS TO HAPPEN FOR THE VALUE OF THE MERGER CONSIDERATION TO BE PAID
TO PEPSIAMERICAS SHAREHOLDERS PARTICIPATING IN THE CONTINGENT PAYMENT
ALTERNATIVE TO EQUAL OR EXCEED THE VALUE OF THE MERGER CONSIDERATION TO BE PAID
TO THE SHAREHOLDERS PARTICIPATING IN THE CASH AND STOCK ALTERNATIVES?
A: The contingent payment alternative has been structured so that the value
of the merger consideration to be paid to PepsiAmericas shareholders
participating in the contingent payment alternative will equal the value of the
merger consideration to be paid to the shareholders participating in the cash
and stock alternatives if PepsiAmericas meets planned performance levels for
fiscal years 2001 and 2002. The value of the merger consideration to be paid to
PepsiAmericas shareholders participating in the contingent payment alternative
will exceed the value of the merger consideration to be paid to the shareholders
participating in the cash and stock alternatives only if PepsiAmericas exceeds
planned performance levels for fiscal years 2000, 2001 and 2002. For purposes of
determining the value of the merger consideration, we have valued each share of
Whitman common stock at the Whitman reference price and excluded any discount to
account for the time value of money.
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Q: DO I NEED TO CHOOSE THE SAME ALTERNATIVE FOR ALL OF MY PEPSIAMERICAS
SHARES?
A: No, you may elect the cash alternative for a portion of your shares, the
stock alternative for a portion of your shares and the contingent payment
alternative for a portion of your shares. If you fail to make any choice, we
will proceed as if you chose the stock alternative for all of your shares.
Q: WHAT DO I NEED TO DO TO GET MY CASH OR SHARES OF WHITMAN COMMON STOCK?
A: If you are a PepsiAmericas shareholder, we will send to you a form of
election, letter of transmittal and return envelope. The form of election and
letter of transmittal will contain instructions for exchanging your shares.
Please carefully review, complete and return the form according to the
instructions contained in the form. You must return the form in the envelope
provided. Do not send in your stock certificates with your proxy cards and/or
voting instructions.
Q: WHO WILL RECEIVE THE SHARES OF WHITMAN COMMON STOCK THAT MIGHT BE PAID TO
ME IN THE FUTURE UNDER THE CONTINGENT PAYMENT ALTERNATIVE IF I CHOOSE THAT
ALTERNATIVE AND THEN SELL MY WHITMAN SHARES?
A: You will. The right to receive shares in the future under the contingent
payment alternative may not be transferred. Accordingly, if you select that
alternative for some or all of your PepsiAmericas shares and later sell the
Whitman shares that you receive upon completion of the merger, you, and not the
person who purchases your Whitman shares, will be the person who receives
additional shares of Whitman common stock if the performance levels are met.
Q: CAN I PURCHASE ADDITIONAL SHARES OF WHITMAN COMMON STOCK IN CONNECTION
WITH THE MERGER?
A: Whitman has also agreed to sell shortly after the closing date of the
merger an aggregate of up to 1,710,863 shares of its common stock, at a price of
$14.6125 per share, to the PepsiAmericas shareholders who participate in the
contingent payment alternative and wish to purchase such shares. We will refer
to these shares as the subscription shares. If you participate in the contingent
payment alternative, the total number of subscription shares that you will be
allowed to purchase will depend on the extent to which the other PepsiAmericas
shareholders elect the contingent payment alternative (which depends, in part,
upon the number of shares of PepsiAmericas common stock outstanding at the time
of the merger). For each of your PepsiAmericas shares that you elect to have
converted into Whitman common stock according to the contingent payment
alternative, you will be entitled, but not obligated, to purchase between 0.0196
(based upon the number of shares of PepsiAmericas common stock presently
outstanding) and 0.0280 additional shares of Whitman common stock at a price of
$14.6125 per share. However, no fractional shares will be issued.
Q: WHAT HAPPENS TO MY SUBSCRIPTION SHARES IF I DO NOT PURCHASE THEM?
A: If you select the contingent payment alternative for some of your
PepsiAmericas shares and do not purchase all of the subscription shares that you
become entitled to purchase, Dakota Holdings will have the right to purchase, at
a price of $14.6125 per share, the shares that you do not purchase. If Dakota
Holdings declines to purchase those shares, they will not be sold to anyone.
Q: WHAT DO I NEED TO DO TO PURCHASE MY SUBSCRIPTION SHARES?
A: The form of election and letter of transmittal described above will
contain instructions for purchasing subscription shares.
Q: WHEN DO THE COMPANIES EXPECT TO COMPLETE THE MERGER?
A: We are working to complete the merger as quickly as possible. We hope to
complete the merger in the fourth quarter of 2000. However, we cannot assure you
that we will complete the merger by then.
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<PAGE>
Q: WHAT SHAREHOLDER APPROVALS ARE REQUIRED TO APPROVE THE MERGER?
A: We must obtain both the approval of the Whitman and PepsiAmericas
shareholders to consummate the merger. The Whitman shareholders must approve the
issuance of shares of Whitman common stock, and the PepsiAmericas shareholders
must adopt the merger agreement in order for the merger to take place. For
Whitman, this requires the affirmative vote of a majority of the total votes
cast on the matter at the Whitman special meeting. For PepsiAmericas, this
requires the affirmative vote of the holders of a majority of the voting power
of the outstanding shares of PepsiAmericas common stock.
PepsiCo holds, directly or indirectly, shares representing approximately 40%
of the outstanding shares of Whitman common stock and has agreed to vote its
shares in favor of the share issuance. Dakota Holdings holds shares representing
approximately 72% of the voting power of the outstanding shares of PepsiAmericas
and has agreed to vote its shares in favor of adopting the merger agreement,
which assures that we will obtain the necessary PepsiAmericas shareholder
approval.
Q: WHO IS ENTITLED TO VOTE?
A: For Whitman, only holders of record of Whitman common stock at the close
of business on [date], 2000 may vote on the share issuance. For PepsiAmericas,
only holders of record of PepsiAmericas common stock at the close of business on
[date], 2000 may vote on the adoption of the merger agreement. In either case,
if you own shares on the record date through a bank, broker or other record
holder, you may vote in person at your special meeting only if you obtain a
proxy from the record holder with respect to your shares.
Q: WHEN AND WHERE IS THE SPECIAL MEETING?
A: Whitman will hold its special meeting on [day], [month], 2000, at
[time] a.m., local time, at [location].
PepsiAmericas will hold its special meeting on [day], [month], 2000, at
[time] a.m., local time, at the Marquette Hotel, 710 Marquette Avenue,
Minneapolis, Minnesota, 55402.
Q: WHAT DO I NEED TO DO NOW?
A: After carefully reading and considering the information contained in this
joint proxy statement/prospectus, please respond by completing, signing and
dating your proxy card and/or voting instructions and returning the same in the
enclosed postage paid envelope. Please vote using one of these methods as soon
as possible so that we may vote your shares at your special meeting.
Q: WHAT IF I DON'T VOTE?
A: If you are a Whitman shareholder and you don't vote your shares, or if
your shares are held by a brokerage firm, bank or other nominee who does not
vote them, your shares will not be included among the votes cast at the Whitman
special meeting. Provided that a quorum is present, abstentions and broker
non-votes will not count for or against the share issuance. If you respond and
do not indicate your voting preference, we will count your proxy as a vote in
favor of the share issuance.
If you are a PepsiAmericas shareholder and you don't vote your shares or you
abstain, or if your shares are held by a brokerage firm, bank or other nominee
who abstains or does not vote them, your shares will have the effect of a vote
against adoption of the merger agreement. If you respond and do not indicate
your voting preference, we will count your proxy as a vote in favor of the
merger agreement.
Q: CAN I CHANGE MY VOTE AFTER I HAVE DELIVERED MY PROXY OR VOTING
INSTRUCTIONS?
A: Yes. You can change your vote at any time before your proxy is voted at a
special meeting. You can do this in one of three ways:
- You can revoke your proxy;
- You can submit a new proxy; or
- If you are a holder of record, you can attend the applicable special
meeting and vote in person.
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If you choose either of the first two methods, you must submit your notice
of revocation or your new proxy to the secretary of Whitman or PepsiAmericas, as
appropriate, before the applicable special meeting. If you hold your shares
through an account at a brokerage firm or bank, you should contact your
brokerage firm or bank to change your vote.
Q: WHO SHOULD I CALL IF I HAVE QUESTIONS?
A: If you have questions about the merger or how to submit your proxy, or if
you need additional copies of this joint proxy statement/ prospectus or the
enclosed proxy card or voting instructions, you should contact:
If you are a Whitman shareholder:
[confirm proxy solicitor]
or
Whitman Corporation
3501 Algonquin Road
Rolling Meadows, Illinois 60008
Attention: [ ]
Telephone: (800) [ ]
If you are a PepsiAmericas shareholder:
Georgeson Shareowner Services
17 State Street
New York, NY 10004
(212) 440-9800
or
PepsiAmericas, Inc.
3800 Dain Rauscher Plaza
60 South Sixth Street
Minneapolis, Minnesota 55402
Attention: John F. Bierbaum
Telephone: (612) 661-3830
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<PAGE>
SUMMARY
This summary highlights selected information about the merger and may not
contain all of the information that is important to you. To better understand
the merger, you should read this entire document carefully, as well as those
additional documents to which we refer you. See "Where You Can Find More
Information" on page 112.
THE COMPANIES
(SEE PAGE 36)
WHITMAN CORPORATION
3501 ALGONQUIN ROAD, ROLLING MEADOWS, ILLINOIS 60008
(847) 818-5000
WEBSITE: http://www.whitmancorp.com
Whitman manufactures, packages, sells and distributes carbonated and
non-carbonated Pepsi-Cola beverages and a variety of other non-alcoholic
beverages in the United States and Central Europe through its principal
operating company, Pepsi-Cola General Bottlers, Inc. Refer to "The Merger--The
Companies--Whitman Corporation" and "Where You Can Find More Information" for
more information about Whitman.
PEPSIAMERICAS, INC.
3800 DAIN RAUSCHER PLAZA, 60 SOUTH SIXTH STREET, MINNEAPOLIS, MINNESOTA 55402
(612) 661-3830
WEBSITE: http://www.pepsiamericas.com
PepsiAmericas and its subsidiaries manufacture, package, sell and distribute
a variety of carbonated and non-carbonated soft drink products and bottled water
in the United States and the Caribbean. Refer to "The Merger--The
Companies--PepsiAmericas, Inc." and "Where You Can Find More Information."
STRUCTURE OF MERGER
(SEE PAGE 75)
At the effective time of the merger, PepsiAmericas will merge with and into
Anchor Merger Sub, Inc., which is a wholly owned subsidiary of Whitman. Anchor
Merger Sub will change its name to "PepsiAmericas, Inc." and continue as the
surviving corporation and a wholly owned subsidiary of Whitman. Anchor Merger
Sub was formed for this transaction and has not had any business activities or
operations aside from this transaction.
SHAREHOLDER APPROVALS
(SEE PAGE 33)
APPROVAL OF WHITMAN SHAREHOLDERS. Whitman shareholders will vote on a
proposal to approve the issuance of Whitman common stock as provided by the
merger agreement. Approval of the share issuance will require the affirmative
vote of a majority of the total votes cast on the matter at the Whitman special
meeting. PepsiCo holds, directly or indirectly, approximately 55 million shares
of Whitman common stock (or approximately 40% of the outstanding shares of
Whitman common stock as of [date], 2000) and has agreed to vote its shares in
favor of the share issuance. As of the record date for the Whitman special
meeting, the directors and executive officers of Whitman and their affiliates,
excluding PepsiCo, owned and were entitled to vote [ ] shares (or approximately
[ ]%) of Whitman common stock then outstanding.
APPROVAL OF PEPSIAMERICAS SHAREHOLDERS. PepsiAmericas shareholders will
vote on a proposal to adopt the merger agreement. Approval of the proposal will
require the affirmative vote of the holders
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<PAGE>
of a majority of the voting power of the outstanding shares of PepsiAmericas
common stock. Dakota Holdings holds 4 million shares of PepsiAmericas Class A
common stock and approximately 57 million shares of PepsiAmericas Class B common
stock (or approximately 72% of the voting power of the outstanding shares of
PepsiAmericas common stock as of [date], 2000) and has agreed to vote its shares
in favor of the merger agreement. As a result, PepsiAmericas shareholder
approval of the merger agreement is assured. As of the record date for the
PepsiAmericas special meeting, the directors and executive officers of
PepsiAmericas and their affiliates beneficially owned 5 million shares of
PepsiAmericas Class A common stock and approximately 59 million shares of
PepsiAmericas Class B common stock, which was approximately 79% of the
PepsiAmericas common stock then outstanding.
APPRAISAL RIGHTS
(SEE PAGE 69)
Under the Delaware General Corporation Law, only holders of Class A common
stock of PepsiAmericas have appraisal rights. Holders of PepsiAmericas Class A
common stock who want to exercise appraisal rights must strictly comply with the
rules governing the exercise of appraisal rights or will lose those rights. We
describe the procedures for exercising appraisal rights in this joint proxy
statement/prospectus under "Appraisal Rights," and we have attached the
provisions of Delaware law that govern appraisal rights as Annex E to this joint
proxy statement/prospectus.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
(SEE PAGE 65)
Whitman and PepsiAmericas will not complete the merger unless they receive
legal opinions to the effect that the merger will qualify as a reorganization
for United States federal income tax purposes. Assuming the merger so qualifies,
for federal income tax purposes:
- if shares of PepsiAmericas common stock are exchanged solely for cash, the
gain or loss on such shares will be recognized;
- if shares of PepsiAmericas common stock are exchanged solely for Whitman
common stock, no gain or loss will be recognized, other than gain or loss
attributable to the receipt of cash in lieu of fractional shares of
Whitman common stock and imputed interest income upon the receipt of any
future shares issued under the contingent payment alternative; and
- if shares of PepsiAmericas common stock are exchanged for a combination of
Whitman common stock and cash, gain, if any, will be recognized up to the
amount of cash received, but losses, if any, will not be recognized.
PepsiAmericas shareholders should read "The Merger--United States Federal
Income Tax Consequences of the Merger" starting on page 65 for a more complete
discussion of the federal income tax consequences of the merger. PepsiAmericas
shareholders should also consult their own tax advisor with respect to the tax
consequences of the merger or any special circumstances that may affect the tax
treatment to them of the cash or stock that they receive in the merger.
RECOMMENDATIONS TO SHAREHOLDERS
(SEE PAGE 45)
WHITMAN. The Whitman board recommends that Whitman shareholders vote FOR
the proposal to approve the issuance of shares of Whitman common stock as
provided by the merger agreement.
PEPSIAMERICAS. The PepsiAmericas board recommends that PepsiAmericas
shareholders vote FOR the proposal to adopt the merger agreement.
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OPINIONS OF FINANCIAL ADVISORS
(SEE PAGE 48)
OPINION OF WHITMAN'S FINANCIAL ADVISOR. In deciding to approve the merger,
the Whitman board of directors considered the opinion of its financial advisor,
Credit Suisse First Boston Corporation, that, as of the date of the opinion and
based upon and subject to the assumptions made, procedures followed, matters
considered and qualifications and limitations of the scope of review set forth
therein, the consideration to be paid by Whitman, in the aggregate, pursuant to
the cash alternative, the stock alternative and the contingent payment
alternative, is fair to Whitman from a financial point of view. We attach the
full text of this opinion as Annex B to this joint proxy statement/prospectus.
Whitman shareholders are encouraged to, and should, read the opinion of Credit
Suisse First Boston carefully and in its entirety.
OPINION OF PEPSIAMERICAS' FINANCIAL ADVISOR. In deciding to approve the
merger, the PepsiAmericas board of directors considered the opinion of its
financial advisor, Salomon Smith Barney Inc., that, as of the date of the
written opinion and based upon and subject to the factors and assumptions set
forth therein, the merger consideration to be received by the holders of
PepsiAmericas common stock (other than Dakota Holdings) is fair from a financial
point of view to such shareholders. We attach the full text of this opinion as
Annex C to this joint proxy statement/prospectus. PepsiAmericas urges its
shareholders to read the opinion of Salomon Smith Barney in its entirety.
OPINION OF PEPSIAMERICAS' SPECIAL COMMITTEE FINANCIAL ADVISOR. In deciding
to approve the merger, the special committee of the PepsiAmericas board of
directors considered the opinion of its financial advisor, Chase
Securities Inc., that, as of the date of the opinion and based upon and subject
to the factors and assumptions set forth therein, the merger consideration each
as elected and to be received by the holders of PepsiAmericas common stock
(other than Whitman, Dakota Holdings and their respective affiliates) is fair
from a financial point of view to such shareholders. We attach the full text of
this opinion as Annex D to this joint proxy statement/prospectus. PepsiAmericas
urges its shareholders to read the opinion of Chase Securities in its entirety.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
(SEE PAGE 72)
PEPSIAMERICAS' DIRECTORS AND EXECUTIVE OFFICERS. Some of the directors and
executive officers of PepsiAmericas have interests in the merger that are
different from, and are in addition to, the interests of PepsiAmericas
shareholders. These interests include the appointment of Robert C. Pohlad, the
Chairman and Chief Executive Officer of PepsiAmericas, as the Chief Executive
Officer and a director of Whitman at the effective time of the merger and the
right of PepsiAmericas directors and officers to receive continued
indemnification and insurance coverage by Whitman for acts or omissions
occurring prior to the merger. For information concerning the interests of
Mr. Pohlad in the merger, see "The Merger Agreement--Principal Covenants--Board
of Directors and Chief Executive Officer of Whitman." In connection with the
consummation of the merger, Kenneth E. Keiser, currently President and Chief
Operating Officer of PepsiAmericas, will become President and Chief Operating
Officer of Whitman's United States operations, and John F. Bierbaum, currently
Senior Vice President and Chief Financial Officer of PepsiAmericas, will become
Executive Vice President, Corporate Growth and Strategic Planning for Whitman.
See "The Merger--Management Following the Transaction."
WHITMAN DIRECTOR. At the effective time of the merger, Archie R. Dykes, a
Whitman director and the Chairman of its Affiliated Transaction Committee, will
become the non-executive Chairman of the board of directors of Whitman. For more
information regarding management following the transaction, see "The
Merger--Management Following the Transaction."
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OPTION TO PURCHASE ADDITIONAL WHITMAN COMMON STOCK. Whitman has agreed to
sell shortly after the closing date of the merger an aggregate of up to
1,710,863 shares of its common stock, at a price of $14.6125 per share, to the
PepsiAmericas shareholders who participate in the contingent payment alternative
and wish to purchase such shares. Each PepsiAmericas shareholder who
participates in the contingent payment alternative will be allowed, but not
required, to purchase a number of Whitman shares that will depend on the extent
to which the other PepsiAmericas shareholders select the contingent payment
alternative (which depends, in part, upon the number of shares of PepsiAmericas
common stock outstanding at the time of the merger). Dakota Holdings will have
the right to purchase, at a price of $14.6125 per share, any of these shares
that are not purchased by the PepsiAmericas shareholders initially entitled to
purchase them. In addition, Pohlad Companies has separately negotiated the right
to acquire from PepsiCo up to $25 million of Whitman common stock currently held
by PepsiCo at that same price. Robert C. Pohlad is the President of Pohlad
Companies and the beneficial owner of one-third of the stock of Pohlad
Companies. For information concerning the interests of the holders of contingent
payment shares in the merger, see "The Merger Agreement--Option to Purchase
Additional Whitman Common Stock."
PEPSIAMERICAS' RELATIONSHIP WITH PEPSICO. Together, PepsiCo and Pohlad
Companies hold 100% of the membership interests of Dakota Holdings. Dakota
Holdings holds shares of PepsiAmericas common stock having approximately 72% of
the voting power of the outstanding shares of PepsiAmericas common stock.
PepsiAmericas is a licensed producer and distributor of Pepsi-Cola
carbonated soft drinks and other beverages. PepsiAmericas purchases from PepsiCo
the concentrate used to produce these carbonated soft drinks and other
beverages. PepsiAmericas is not obligated to purchase from PepsiCo any specific
or minimum quantity of concentrate, and does not pay PepsiCo any other fees or
amounts.
PepsiAmericas and PepsiCo share the common business objective of increasing
the market share of Pepsi-Cola products. In furtherance of this objective,
PepsiCo provides PepsiAmericas with marketing support in a variety of forms,
including marketplace support, marketing programs and equipment and shared media
expense. There are no conditions or requirements that could result in the
repayment of any marketing support payments received by PepsiAmericas from
PepsiCo.
PepsiAmericas manufacturers, distributes and services fountain beverage
equipment to other PepsiCo customers in accordance with various agreements.
PepsiAmericas also produces or distributes other products and purchases finished
goods and concentrate through various arrangements with PepsiCo or partners of
PepsiCo.
WHITMAN'S RELATIONSHIP WITH PEPSICO. PepsiCo holds, directly or indirectly,
approximately 40% of the outstanding shares of Whitman common stock.
Pepsi-Cola General Bottlers, Whitman's principal operating company, is a
licensed producer and distributor of PepsiCo carbonated soft drinks and other
non-alcoholic beverages. Pepsi-Cola General Bottlers purchases concentrate from
PepsiCo to be used in the production of these carbonated soft drinks and other
non-alcoholic beverages.
PepsiCo and Pepsi-Cola General Bottlers share a business objective of
increasing availability and consumption of PepsiCo's brands. Accordingly,
PepsiCo provides Pepsi-Cola General Bottlers with various forms of marketing
support to promote PepsiCo's brands. This support covers a variety of
initiatives, including market place support, marketing programs, marketing
equipment and related program support and shared media expense. There are no
conditions or requirements that could result in the repayment of any support
payments received by Pepsi-Cola General Bottlers.
Pepsi-Cola General Bottlers manufactures and distributes fountain products
and provides fountain equipment service to PepsiCo customers in certain
territories in accordance with various agreements.
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There are other products that Pepsi-Cola General Bottlers produces and/or
distributes through various arrangements with PepsiCo or partners of PepsiCo.
INTERESTS OF POHLAD COMPANIES. PepsiAmericas maintains management
agreements with Pohlad Companies. For services performed pursuant to the
management agreements, PepsiAmericas pays Pohlad Companies management fees.
Management fees of approximately $3,005,000, $774,000 and $644,000 were recorded
in the fiscal year ended December 31, 1999, the three months ended December 31,
1998, and in the fiscal year ended September 30, 1998 (which only included the
results of Delta Beverage Group, Inc. and Dakota Beverage Company, Inc. for the
period from July 17, 1998, the earliest date that Pohlad Companies had common
control of PepsiAmericas, to September 30, 1998), respectively. The management
agreements will be terminated as of the effective time of the merger.
CONDITIONS TO THE MERGER
(SEE PAGE 92)
Completion of the merger requires the satisfaction or waiver of the
following conditions:
- approval of the issuance of Whitman common stock by the Whitman
shareholders and adoption of the merger agreement by the PepsiAmericas
shareholders;
- the absence of any law or injunction preventing the merger;
- approval of the Whitman common stock to be issued for listing on the NYSE,
Chicago Stock Exchange and Pacific Stock Exchange;
- compliance in all material respects by Whitman and PepsiAmericas with
their respective agreements contained in the merger agreement;
- the accuracy in all material respects of the respective representations
and warranties of Whitman and PepsiAmericas contained in the merger
agreement;
- receipt of legal opinions from counsel to Whitman and counsel to
PepsiAmericas to the effect that the merger will qualify as a
reorganization under the Internal Revenue Code;
- receipt of any authorizations, consents, approvals or exemptions required
to be obtained pursuant to the merger agreement;
- redemption and cancellation of all shares of Series AA Preferred Stock of
Delta Beverage Group, Inc., a subsidiary of PepsiAmericas; and
- execution by Whitman and PepsiCo of the amended and restated shareholder
agreement, adoption of the amendment to Whitman's bylaws and execution by
Whitman and Pohlad Companies of the Pohlad shareholder agreement.
TERMINATION OF THE MERGER AGREEMENT
(SEE PAGE 93)
Whitman and PepsiAmericas may agree to terminate the merger agreement at any
time. In addition, either company may terminate the merger agreement under any
of the following circumstances:
- if a law, court order or other government action, which can no longer be
appealed, prohibits the merger;
- if the shareholders of Whitman vote against the issuance of Whitman common
stock as provided by the merger agreement or the shareholders of
PepsiAmericas vote against the adoption of the merger agreement; or
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- if we do not complete the merger by February 28, 2001, unless the failure
to complete the merger is the result of a material breach of the merger
agreement by the party seeking to terminate the merger agreement.
In addition, Whitman may terminate the merger agreement:
- if PepsiAmericas breaches in any material respect its representations and
warranties made in the merger agreement or fails to perform in any
material respect any agreement that it is required to perform before the
completion of the merger;
- if the board of directors of PepsiAmericas withdraws or modifies, in a
manner adverse to Whitman, its recommendation of the merger or approves or
recommends an alternative transaction, or resolves to do either; or
- if PepsiAmericas fails to hold its special meeting.
In addition, PepsiAmericas may terminate the merger agreement:
- if Whitman breaches in any material respect its representations and
warranties made in the merger agreement or fails to perform in any
material respect any agreement that it is required to perform before the
completion of the merger;
- if the board of directors of Whitman withdraws or modifies, in a manner
adverse to PepsiAmericas, its recommendation of the merger or approves or
recommends an alternative transaction, or resolves to do either; or
- if Whitman fails to hold its special meeting.
PEPSICO SHAREHOLDER AGREEMENT
(SEE PAGE 95)
Whitman and PepsiCo will enter into an amended and restated shareholder
agreement on the closing date of the merger.
Under the amended and restated shareholder agreement, PepsiCo's and its
affiliates' ownership of Whitman common stock will be limited to a maximum
ownership percentage of 49% of the outstanding shares of Whitman common stock,
and the combined ownership of PepsiCo and its affiliates, together with
Robert C. Pohlad, his affiliates and his family, will be limited to a maximum
ownership percentage of 49.9% of the outstanding shares of Whitman common stock.
Any acquisitions by PepsiCo that would cause the maximum ownership percentage to
be exceeded will require the consent of either (1) the directors of Whitman not
affiliated with PepsiCo or (2) the shareholders of Whitman not affiliated with
PepsiCo, or pursuant to an offer for all outstanding shares of Whitman common
stock at a price meeting specific minimum-price criteria.
The amended and restated shareholder agreement specifies that during the
term of the agreement, except with regard to Dakota Holdings, none of PepsiCo or
its affiliates will enter into any agreement or commitment with Robert C.
Pohlad, his affiliates or his family with respect to the holding, voting,
acquisition or disposition of Whitman common stock.
The amended and restated shareholder agreement also restricts transfers by
PepsiCo and its affiliates that would result in a third party unaffiliated with
PepsiCo owning greater than 20% of the outstanding shares of Whitman common
stock.
11
<PAGE>
POHLAD SHAREHOLDER AGREEMENT
(SEE PAGE 99)
Whitman, Pohlad Companies, Dakota Holdings and Robert C. Pohlad will enter
into a shareholder agreement on the closing date of the merger.
Under the Pohlad shareholder agreement, Robert C. Pohlad, his affiliates and
his family will generally be limited to an ownership threshold equal to their
aggregate percentage ownership of Whitman common stock upon the consummation of
the transactions contemplated by the merger agreement (including the receipt of
Whitman common stock pursuant to the contingent payment alternative, the
purchase of subscription shares and purchases pursuant to the right of Pohlad
Companies to acquire Whitman common stock with a value of $25 million from
PepsiCo and its affiliates), and the combined ownership of Robert C. Pohlad, his
affiliates and his family, together with PepsiCo and its affiliates, will be
limited to a maximum ownership percentage of 49.9% of the outstanding shares of
Whitman common stock. Any acquisitions by Mr. Pohlad, his affiliates or his
family that would cause the maximum ownership percentage to be exceeded will
require the consent of either (1) the directors of Whitman not affiliated with
PepsiCo, (2) the shareholders of Whitman not affiliated with PepsiCo, or (3)
pursuant to an offer for all outstanding shares of Whitman common stock at a
price meeting specific minimum-price criteria.
The Pohlad shareholder agreement specifies that during the term of the
agreement, except with regard to Dakota Holdings, none of Mr. Pohlad, his
affiliates or his family will enter into any agreement or other understanding
with PepsiCo or its affiliates with respect to the holding, voting, acquisition
or disposition of Whitman common stock.
REGULATORY MATTERS
(SEE PAGE 68)
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
we cannot complete the merger until we furnish certain information and
documentary material for review by the Federal Trade Commission and the
Antitrust Division of the Department of Justice and the required waiting period
expires or is terminated. Both Whitman and PepsiAmericas filed a
Hart-Scott-Rodino Premerger Notification and Report Form on [date], 2000. Under
the Hart-Scott-Rodino Act, the waiting period for the merger will expire on
[date], 2000.
ACCOUNTING TREATMENT
(SEE PAGE 64)
We will account for the merger using the purchase method of accounting under
United States generally accepted accounting principles. See "Pro Forma Combined
Financial Information (Unaudited)" and "The Merger--Accounting Treatment."
12
<PAGE>
SELECTED FINANCIAL INFORMATION
WHITMAN SELECTED FINANCIAL INFORMATION
The following table presents selected financial information for Whitman for
the fiscal years 1995 through 1999 and for the first half of 1999 and 2000. The
financial information in the table should be read along with the historical
consolidated financial statements and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" that appear in Whitman's 1999
Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the quarter
ended July 1, 2000, which are incorporated by reference in this joint proxy
statement/prospectus.
The following transactions were recorded during the periods presented:
- In 1999, Whitman recorded special charges of $27.9 million related to
staff reduction costs and non-cash asset write-downs, principally related
to the acquisition of certain domestic and international territories from
PepsiCo. These charges reduced domestic and international operating income
by $7.3 million and $20.6 million, respectively.
In addition, in the first quarter of 1999 Whitman recorded charges of
$4.5 million related to severance, insurance and legal matters, which were
classified as part of selling, general and administrative expenses.
- In 1999, Whitman entered into a contract for the sale of property in
downtown Chicago and recorded a charge of $56.3 million ($35.9 million
after tax) to reduce the book value of the property.
- In 1999, Whitman recorded a pretax gain of $13.3 million ($7.8 million
after tax and minority interest), related to the sale of franchises in
Marion, Virginia; Princeton, West Virginia and the St. Petersburg area of
Russia. This pretax gain is reflected in "other expense, net."
- In 1999, Whitman recorded a $19.8 million reduction in taxes from the
elimination of deferred tax liabilities related to its international
operations.
- On January 30, 1998, Whitman distributed all of the common stock of
Hussmann International, Inc. and Midas, Inc. to its shareholders in
tax-free spin-offs. The table excludes the results of Hussmann and Midas,
which are classified as discontinued operations.
- In 1997, Whitman recorded special charges of $49.3 million related to the
restructuring of Pepsi-Cola General Bottlers' organization, the severance
of essentially all of the Whitman corporate management and staff, and
expenses associated with the spin-offs of Hussmann and Midas.
- In 1996, Whitman recorded an $8.7 million charge, principally for asset
write-downs at Pepsi-Cola General Bottlers' joint venture in Poland.
The table also presents selected unaudited pro forma financial information
for fiscal year 1999, which assumes the transactions with PepsiCo, described
under "The Merger--The Companies--Whitman Corporation," occurred at the
beginning of fiscal year 1999.
Excluding the impact of special charges of $27.9 million, the charge of
$56.3 million related to the impairment of real estate, the $13.3 million gain
on the sale of franchise territories, and the
13
<PAGE>
$19.8 million reduction in taxes, the Whitman 1999 pro forma and reported
results would have been as follows:
<TABLE>
<CAPTION>
PRO FORMA
1999 1999
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Net sales........................................... $2,398.5 $2,138.2
Operating income.................................... $ 208.9 $ 209.4
Income from continuing operations................... $ 72.3 $ 72.9
Income from continuing operations per share:
Basic............................................. $ 0.52 $ 0.59
Diluted........................................... $ 0.52 $ 0.59
Weighted average common shares outstanding:
Basic............................................. $ 139.1 $ 123.3
Diluted........................................... $ 140.0 $ 124.2
</TABLE>
WHITMAN CORPORATION
SELECTED FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FIRST HALF FISCAL YEARS
------------------------- ------------------------------------------------------------------
PRO FORMA
2000 1999 1999 1999 1998 1997 1996 1995
----------- ----------- ----------- -------- -------- -------- -------- --------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net sales........................ $1,231.5 $ 875.5 $2,398.5 $2,138.2 $1,617.5 $1,538.8 $1,486.7 $1,435.6
Gross profit..................... 508.3 357.7 1,006.7 889.5 649.0 615.7 609.9 568.8
Operating income................. 116.7 68.0 181.0 181.5 203.8 130.2 194.8 181.1
Income from continuing
operations..................... 40.8 10.6 46.4 42.9 62.5 15.8 47.8 46.8
PER SHARE DATA:
Income from continuing operations
per share:
Basic.......................... $ 0.30 $ 0.04 $ 0.33 $ 0.35 $ 0.62 $ 0.16 $ 0.46 $ 0.44
Diluted........................ 0.30 0.04 0.33 0.35 0.61 0.15 0.45 0.44
Weighted average common shares
outstanding:
Basic.......................... 137.2 105.5 139.1 123.3 101.1 101.6 104.8 104.9
Diluted........................ 137.6 106.7 140.0 124.2 102.9 102.9 106.0 106.0
Cash dividends per share......... $ 0.04 $ 0.06 $ 0.08 $ 0.08 $ 0.20 $ 0.45 $ 0.41 $ 0.37
OTHER FINANCIAL DATA:
EBITDA........................... $ 198.5 $ 140.1 $ 371.6 $ 337.5 $ 266.0 $ 235.3 $ 253.1 $ 236.4
Cash provided by operating
activities..................... 73.9 34.3 291.1 181.8 169.8 152.9 145.9 116.8
Capital expenditures............. 91.8 82.1 190.2 165.4 159.1 83.4 87.2 111.1
Book value per share............. 8.43 8.29 8.21 8.21 3.23 5.34 6.26 5.97
Total assets..................... 2,911.4 2,879.8 2,864.3 2,864.3 1,569.3 2,029.7 2,080.6 2,050.5
Long-term debt................... 808.7 802.9 809.0 809.0 603.6 604.7 821.7 810.3
</TABLE>
EBITDA is defined as income before income taxes, interest, depreciation and
amortization. In addition, EBITDA as presented excludes any non-recurring
charges or credits recorded during the respective periods presented. Information
concerning EBITDA has been included because it is expected to be used by some
investors as a measure of operating performance and of the ability to service
potential debt. EBITDA is not required under GAAP, and should not be considered
an alternative to income from continuing operations or any other measure of
performance required by GAAP. It also should not be used as a measure of cash
flow or liquidity under GAAP.
14
<PAGE>
This information is only a summary and you should read it together with the
financial information incorporated by reference in this joint proxy
statement/prospectus. See "Where You Can Find More Information" on page 112.
PEPSIAMERICAS SELECTED FINANCIAL INFORMATION
The following table presents selected financial information of PepsiAmericas
and its subsidiaries. This data has been derived from the historical
consolidated financial statements of PepsiAmericas (formerly known as Pepsi-Cola
Puerto Rico Bottling Company), except for the pro forma 1999 results described
below. The historical results have been restated for the combination of
interests transaction described below. Prior to January 1, 1999, PepsiAmericas'
fiscal year end was September 30. Effective at that date, PepsiAmericas changed
its fiscal year-end to December 31. As a result, PepsiAmericas reported its
results for the three-month period ended December 31, 1998 to conform to the new
fiscal year-end. The financial data in the table should be read in conjunction
with the historical consolidated financial statements and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" that
appear in PepsiAmericas' 1999 Annual Report on Form 10-K and Quarterly Report on
Form 10-Q for the quarter ended June 30, 2000, which are incorporated by
reference in this joint proxy statement/prospectus.
On October 15, 1999, PepsiAmericas combined with Delta Beverage Group, Inc.
and Dakota Beverage Company, Inc. in a transaction accounted for as a merger of
entities under common control with the acquisition of certain minority interests
in Delta Beverage recognized using the purchase method of accounting.
PepsiAmericas' consolidated financial statements have been restated beginning
July 17, 1998 (the earliest date upon which common control existed in each of
PepsiAmericas, Delta Beverage and Dakota Beverage) to include the financial
position and results of operations of the combined companies since that date.
The table also presents summary unaudited pro forma financial information
for 1999 to reflect the effects of the common control merger which occurred on
October 15, 1999.
The following pretax special charges and credits were recorded by
PepsiAmericas during the periods presented:
- In the year ended December 31, 1999, PepsiAmericas incurred an additional
asset impairment loss of $0.3 million on the sale of a division engaged in
bottling and distribution of bulk water in Puerto Rico and recorded a
provision of $3.4 million related to termination of deferred compensation
plans at Delta Beverage and Dakota Beverage, following the combination
transaction. The deferred compensation plans were revalued to reflect the
values of those companies in the combination of interests as determined by
a third party investment bank. Professional fees of $4.9 million and other
costs attributable to conforming the common interests were also expensed.
PepsiAmericas was also able to resolve certain legal and environmental
matters for $0.5 million less than the reserve established in the fiscal
year ended September 30, 1998.
- In the three months ended December 31, 1998, a charge for $0.2 million
reflects an asset impairment loss relating to the sale of a division
engaged in bottling and distribution of bulk water in Puerto Rico. An
additional $0.3 million of insurance proceeds related to loss of business
from Hurricane Georges was recorded.
- In fiscal year ended September 30, 1998, charges of $3.3 million were
incurred related to a restructuring plan, a provision for legal and
environmental issues and a further write-down of an out-of-service
bottling plant in San Juan, Puerto Rico. PepsiAmericas also recorded an
insurance recovery of $1.3 million for loss of business due to Hurricane
Georges.
- In fiscal year ended September 30, 1997, a charge of $13.2 million
represented costs in connection with PepsiAmericas' settlement of civil
litigation with shares of its common stock that
15
<PAGE>
were contributed to PepsiAmericas by its founding shareholders. In
addition, a charge of $0.5 million was incurred for costs associated with
a 5% reduction of the workforce.
- In fiscal year ended September 30, 1996, a charge of $2.7 million reflects
a $1.4 million write-down of the carrying value of a bottling plant in San
Juan, Puerto Rico that was taken out of service and a $1.3 million
adjustment of pension costs associated with employee terminations.
PEPSIAMERICAS, INC.
SELECTED FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS THREE FISCAL YEARS ENDED SEPTEMBER
ENDED PRO FORMA YEAR MONTHS 30
------------------- YEAR ENDED ENDED ENDED -----------------------------------------
06/30/00 06/30/99 12/31/99 12/31/99 12/31/98 1998 1997 1996 1995
-------- -------- ----------- -------- -------- -------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net sales................... $307.5 $275.6 $575.7 $575.7 $136.6 $196.3 $ 99.2 $102.9 $114.3
Gross profit................ 100.7 88.8 183.5 183.5 42.6 59.9 30.9 27.9 46.5
Operating income (loss)..... 15.6 11.1 20.7 19.0 5.1 (1.0) (21.4) (26.8) 9.7
Net income (loss) before
equity in BAESA and
extraordinary item........ (3.4) 0.8 (14.2) (8.7) 1.7 (4.5) (19.5) (22.9) 9.4
Equity in BAESA income
(loss) net of taxes(7).... -- -- -- -- -- -- -- (51.5) 5.6
Net income (loss)(1)(6)..... (3.4) 0.8 (14.9) (9.5) 1.7 (4.5) (19.5) (74.3) 15.1
PER SHARE DATA(2):
Net income (loss) before
equity in BAESA and
extraordinary item........ $(0.04) $ 0.01 $(0.16) $(0.10) $ 0.02 $(0.14) $(0.91) $(1.06) $ 0.52
Net income (loss)........... (0.04) 0.01 (0.17) (0.11) 0.02 (0.14) (0.91) (3.46) 0.83
Weighted average common
shares outstanding........ 87.3 86.8 86.8 86.8 86.8 35.1 21.5 21.5 18.1
Dividends declared per
common share(5)........... -- -- -- -- -- -- -- 0.24 0.27
OTHER FINANCIAL DATA:
EBITDA(3)................... $ 30.0 $ 23.1 $ 54.2 $ 51.7 $ 11.2 $ 8.0 $(15.4) $(70.8) $ 20.5
Cash provided by (used in)
operating activities...... 4.9 11.5 27.3 24.8 1.9 4.3 (7.5) (6.5) 16.5
Capital expenditures........ 20.7 19.5 29.1 29.1 3.1 5.5 4.7 24.4 10.4
Book value per share........ 1.21 0.69 1.26 1.26 0.70 1.76 2.02 2.30 7.11
Total assets................ 528.4 417.6 516.1 516.1 410.1 418.5 95.9 110.0 185.7
Long-term debt(4)........... 307.2 242.7 286.8 286.8 236.5 234.7 26.1 7.6 10.0
</TABLE>
------------------------------
(1) Includes an extraordinary loss in the year ended December 31, 1999 of
$0.7 million, net of tax, from early extinguishment of debt.
(2) Income (loss) per common share and dividends declared per common share are
determined by dividing net income by the weighted average number of shares
of PepsiAmericas common stock outstanding during each period and dividends
declared by the number of shares of PepsiAmericas common stock outstanding
at the time of dividend declaration, respectively. Income (loss) per share
information for fiscal year 1995 has been adjusted to give effect to a
stock split that occurred in fiscal year 1995.
(3) EBITDA consists of net income (loss) before special charges, income taxes,
interest, dividends on subsidiary's preferred stock and depreciation and
amortization. EBITDA is included herein to provide additional information
about PepsiAmericas' ability to service its debt. EBITDA should not be
considered as an alternative measure of PepsiAmericas' net income,
operating income, cash flow from operating activities or liquidity.
(4) Includes current maturities of long-term debt.
(5) Excludes dividends of Dakota Beverage, as a subchapter S corporation, for
distribution of income taxes and profits prior to the combination of
interests on October 15, 1999.
(6) Net income includes minority interest, which is comprised of the portion of
Delta Beverage's net income (loss) not related to the common interests from
July 17, 1998 to October 15, 1999, dividends on Delta Beverage's preferred
stock after July 17, 1998 and the minority share of the net income of Delta
Beverage's joint venture subsidiary after July 17, 1998. Minority interests
were tax affected.
(7) Prior to July 1, 1997, PepsiAmericas owned approximately 17% of the
outstanding capital stock of Buenos Aires Embotteladora S.A. ("BAESA"),
which is presented as Equity in BAESA income (loss) net of taxes in 1996
and 1995. PepsiAmericas' recorded investment in BAESA had been reduced to
zero in fiscal year 1996.
16
<PAGE>
This information is only a summary and you should read it together with the
financial information incorporated by reference in this joint proxy
statement/prospectus. See "Where You Can Find More Information" on page 112.
PRO FORMA COMBINED FINANCIAL INFORMATION (UNAUDITED)
The unaudited Pro Forma Combined Statements of Income of Whitman for the
first half of 2000 and fiscal year 1999 present the pro forma combined results
of operations of Whitman assuming the merger of Whitman and PepsiAmericas had
been completed as of the beginning of fiscal year 1999. The adjustments required
to give effect to the merger are set forth in the "Pro Forma Adjustments"
column.
The unaudited Pro Forma Combined Balance Sheet of Whitman as of the end of
the second quarter of 2000 presents the pro forma combined financial position of
Whitman assuming the merger of Whitman and PepsiAmericas occurred at the end of
the second quarter. The adjustments required to give effect to the merger are
set forth in the "Pro Forma Adjustments" column.
The unaudited pro forma combined financial information should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated financial statements and
accompanying notes of Whitman contained in Whitman's 1999 Annual Report on
Form 10-K and Quarterly Report on Form 10-Q for the period ended July 1, 2000
and of PepsiAmericas contained in PepsiAmericas' 1999 Annual Report on
Form 10-K and Quarterly Report on Form 10-Q for the period ended June 30, 2000.
The pro forma financial information presented is for informational purposes only
and may not necessarily reflect future results of operations or financial
position of Whitman or what the results of operations or financial position of
Whitman would have been had the merger actually taken place as of the periods
shown.
The consideration to be received by PepsiAmericas' shareholders in the
merger will depend, in part, on the average closing price of Whitman common
stock during the 15 consecutive trading days ending on the fifth trading day
immediately prior to the earlier of the Whitman special meeting or the
PepsiAmericas special meeting. We refer to this average closing price as the
Whitman reference price.
If the Whitman reference price is between $13.1513 and $16.0738, each share
of PepsiAmericas common stock will be converted, at the election of its holder,
into:
- $3.80 in cash;
- shares of Whitman common stock with a value of $3.80 (based on the Whitman
reference price); or
- shares of Whitman common stock with a value of $2.80 (based on the Whitman
reference price), plus the right to receive in the future additional
shares of Whitman common stock with a value of up to $1.50 (based on the
Whitman reference price) if PepsiAmericas meets certain performance levels
for the years 2000 through 2002.
If the Whitman reference price is greater than or equal to $16.0738, each
share of PepsiAmericas common stock will be converted, at the election of its
holder, into:
- cash equal to the Whitman reference price multiplied by 0.2364, which will
be more than $3.80;
- 0.2364 shares of Whitman common stock, which will be worth more than $3.80
(based on the Whitman reference price); or
- 0.1741 shares of Whitman common stock, which will be worth more than $2.80
(based on the Whitman reference price) plus the right to receive in the
future up to 0.0933 additional shares of Whitman common stock, which will
be worth more than $1.50 (based on the Whitman reference price), if
PepsiAmericas meets the performance levels referenced above.
17
<PAGE>
If the Whitman reference price is less than or equal to $13.1513, each share
of PepsiAmericas common stock will be converted, at the election of its holder,
into:
- cash equal to the Whitman reference price multiplied by 0.2889, which will
be less than $3.80;
- 0.2889 shares of Whitman common stock, which will be worth less than $3.80
(based on the Whitman reference price); or
- 0.2128 shares of Whitman common stock, which will be worth less than $2.80
(based on the Whitman reference price) plus the right to receive in the
future up to 0.1140 additional shares of Whitman common stock, which will
be worth less than $1.50 (based on the Whitman reference price), if
PepsiAmericas meets the performance levels referenced above.
We refer to alternatives available to PepsiAmericas shareholders as the cash
alternative, the stock alternative and the contingent payment alternative,
respectively.
Dakota Holdings holds approximately 72% of the voting power of the
outstanding shares of PepsiAmericas common stock and has agreed to participate
in the contingent payment alternative with respect to all of its shares.
Whitman has agreed to sell shortly after the closing date of the merger an
aggregate of up to 1,710,863 shares of its common stock, at a price of $14.6125
per share, to the PepsiAmericas shareholders who participate in the contingent
payment alternative. Each PepsiAmericas shareholder who participates in the
contingent payment alternative will be allowed, but not required, to purchase a
number of Whitman shares that will depend on the extent to which the other
PepsiAmericas shareholders participate in the contingent payment alternative.
Dakota Holdings will have the right to purchase, at a price of $14.6125 per
share, any of these shares that are not purchased by the PepsiAmericas
shareholders initially entitled to purchase them.
The pro forma financial information presented below assumes that the Whitman
reference price is $13.0917, based on the average closing price of Whitman
common stock during the 15 consecutive trading days ending on September 18,
2000. As described above, the Whitman reference price will be equal to the
average closing price of Whitman common stock during the 15 consecutive trading
days ending on the fifth trading day immediately prior to the earlier of the
Whitman special meeting or the PepsiAmericas special meeting. The pro forma
adjustments assume all PepsiAmericas public shareholders (shareholders other
than Dakota Holdings) elect the cash alternative. The notes included with the
pro forma financial information describe the range of possible outcomes under
the terms of the agreement, which are subject to varying results due to the
alternatives available to PepsiAmericas shareholders as well as variations
depending on whether the Whitman reference price is between $13.1513 and
$16.0738, greater than or equal to $16.0738 or less than or equal to $13.1513.
18
<PAGE>
WHITMAN CORPORATION
PRO FORMA COMBINED BALANCE SHEET
AT THE END OF THE SECOND QUARTER OF 2000
(UNAUDITED AND IN MILLIONS)
<TABLE>
<CAPTION>
WHITMAN PEPSIAMERICAS PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
---------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Current assets:
Cash and equivalents....................... $ 103.7 $ 9.1 $ (75.0)(1) $ 37.8
Receivables................................ 308.2 71.5 -- 379.7
Inventory.................................. 127.3 33.8 -- 161.1
Other current assets....................... 35.8 27.6 -- 63.4
-------- -------- -------- --------
Total current assets..................... 575.0 142.0 (75.0) 642.0
-------- -------- -------- --------
Other investments............................ 55.8 -- -- 55.8
Plant, property and equipment, net of
accumulated depreciation................... 836.3 157.8 -- 994.1
Intangibles, net of accumulated
amortization............................... 1,408.0 184.4 (184.4)(1)
368.1 (1) 1,776.1
Deferred tax assets.......................... -- 15.7 -- 15.7
Other assets................................. 36.3 28.4 (3.3)(1)
0.8 (1) 62.2
-------- -------- -------- --------
Total assets............................... $2,911.4 $ 528.3 $ 106.2 $3,545.9
======== ======== ======== ========
Current liabilities:
Short-term debt............................ $ 432.4 $ 7.7 $ -- $ 440.1
Accounts payable........................... 201.1 28.0 -- 229.1
Accrued expenses........................... 167.1 38.7 12.7 (1) 218.5
-------- -------- -------- --------
Total current liabilities................ 800.6 74.4 12.7 887.7
-------- -------- -------- --------
Long-term debt............................... 808.7 299.5 24.1 (1)
4.9 (1)
32.7 (2)
-- (3) 1,169.9
Deferred income taxes........................ 65.3 -- -- 65.3
Other liabilities............................ 88.2 12.9 -- 101.1
Minority interest............................ -- 35.8 (32.7)(2) 3.1
Shareholders' equity:
Common stock............................... 1,634.0 223.6 170.2 (1)
(223.6)(1)
-- (3) 1,804.2
Retained income (loss)..................... 121.0 (117.5) 117.5 (1) 121.0
Accumulated other comprehensive loss:
Cumulative translation adjustment........ (32.7) (0.4) 0.4 (1) (32.7)
Other.................................... 7.0 -- -- 7.0
-------- -------- -------- --------
Accumulated other comprehensive loss....... (25.7) (0.4) 0.4 (25.7)
-------- -------- -------- --------
Treasury stock............................. (580.7) -- -- (580.7)
-------- -------- -------- --------
Total shareholders' equity............... 1,148.6 105.7 64.5 1,318.8
-------- -------- -------- --------
Total liabilities and shareholders'
equity................................... $2,911.4 $ 528.3 $ 106.2 $3,545.9
======== ======== ======== ========
</TABLE>
See accompanying notes to the pro forma combined financial information.
19
<PAGE>
WHITMAN CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
FIRST HALF OF 2000
(UNAUDITED AND IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
WHITMAN PEPSIAMERICAS PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
----------------- --------------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales........................... $1,231.5 $ 307.5 $ -- $1,539.0
Cost of sales....................... 723.2 206.8 -- (4) 930.0
-------- -------- ------ --------
Gross profit........................ 508.3 100.7 -- 609.0
Selling, general and administrative
expenses.......................... 371.2 82.5 -- (4) 453.7
Amortization expense................ 20.4 2.6 2.0 (5) 25.0
-------- -------- ------ --------
Operating income.................... 116.7 15.6 (2.0) 130.3
Interest expense, net............... (41.6) (14.7) (1.4)(6) (57.7)
Other income (expense), net......... 3.0 0.2 -- 3.2
-------- -------- ------ --------
Pretax income....................... 78.1 1.1 (3.4) 75.8
Income taxes........................ (37.3) (3.5) 0.6 (7) (40.2)
Minority interest, net of taxes..... -- (1.0) 1.0 (8) --
-------- -------- ------ --------
Income (loss) from continuing
operations........................ $ 40.8 $ (3.4) $ (1.8) $ 35.6
======== ======== ====== ========
Income (loss) from continuing
operations per share:
Basic............................. $ 0.30 $ 0.24
Diluted........................... $ 0.30 $ 0.24
Weighted average common shares
outstanding:
Basic............................. 137.2 150.2
Incremental effect of stock
options......................... 0.4 0.4
-------- --------
Diluted........................... 137.6 150.6
======== ========
</TABLE>
See accompanying notes to the pro forma combined financial information.
20
<PAGE>
WHITMAN CORPORATION
PRO FORMA COMBINED STATEMENT OF INCOME
FISCAL YEAR 1999
(UNAUDITED AND IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
WHITMAN PEPSIAMERICAS
----------------------------------------- ---------------------------------------------
PRO FORMA PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS(10) PRO FORMA HISTORICAL ADJUSTMENTS(11) PRO FORMA ADJUSTMENTS
----------- --------------- --------- ------------ --------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales............ $2,138.2 $260.3 $2,398.5 $575.7 $ -- $575.7 $ --
Cost of sales........ 1,248.7 143.1 1,391.8 392.2 -- 392.2 -- (4)
-------- ------ -------- ------ ----- ------ ------
Gross profit......... 889.5 117.2 1,006.7 183.5 -- 183.5 --
Selling, general and
administrative
expenses........... 650.8 107.5 758.3 152.0 (2.5) 149.5 -- (4)
Amortization
expense............ 29.3 10.2 39.5 4.4 0.8 5.2 4.0 (5)
Special charges...... 27.9 -- 27.9 8.1 -- 8.1 --
-------- ------ -------- ------ ----- ------ ------
Operating income..... 181.5 (0.5) 181.0 19.0 1.7 20.7 (4.0)
Interest expense,
net................ (63.9) (6.6) (70.5) (22.1) (1.9) (24.0) (2.8)(6)
Other income
(expense), net..... (46.0) 1.2 (44.8) (0.2) -- (0.2) --
-------- ------ -------- ------ ----- ------ ------
Pretax income
(loss)............. 71.6 (5.9) 65.7 (3.3) (0.2) (3.5) (6.8)
Income taxes......... (22.1) 2.8 (19.3) (4.8) (4.2) (9.1) 1.1 (7)
Minority interest,
net of taxes....... (6.6) 6.6 -- (0.6) (1.0) (1.6) 1.3 (8)
-------- ------ -------- ------ ----- ------ ------
Income (loss) from
continuing
operations......... $ 42.9 $ 3.5 $ 46.4 $ (8.7) $(5.4) $(14.2) $ (4.4)
======== ====== ======== ====== ===== ====== ======
Income (loss) from
continuing
operations per
share:
Basic.............. $ 0.35 $ 0.33
Diluted............ $ 0.35 $ 0.33
Weighted average
common shares
outstanding:
Basic................ 123.3 15.8 139.1
Incremental effect of
options............ 0.9 -- 0.9
-------- ------ --------
Diluted.............. 124.2 15.8 140.0
======== ====== ========
<CAPTION>
PRO FORMA
---------
<S> <C>
Net sales............ $2,974.2
Cost of sales........ 1,784.0
--------
Gross profit......... 1,190.2
Selling, general and
administrative
expenses........... 907.8
Amortization
expense............ 48.7
Special charges...... 36.0
--------
Operating income..... 197.7
Interest expense,
net................ (97.3)
Other income
(expense), net..... (45.0)
--------
Pretax income
(loss)............. 55.4
Income taxes......... (27.3)
Minority interest,
net of taxes....... (0.3)
--------
Income (loss) from
continuing
operations......... $ 27.8
========
Income (loss) from
continuing
operations per
share:
Basic.............. $ 0.18
Diluted............ $ 0.18
Weighted average
common shares
outstanding:
Basic................ 152.1
Incremental effect of
options............ 0.9
--------
Diluted.............. 153.0
========
</TABLE>
See accompanying notes to the pro forma combined financial information.
21
<PAGE>
Notes to Pro Forma Combined Financial Information
BALANCE SHEET ADJUSTMENTS
(1) Record the acquisition of PepsiAmericas by Whitman (in millions):
<TABLE>
<S> <C>
Acquisition costs:
Issuance of Whitman common stock to Dakota Holdings....... $ 170.2
Payment of cash to PepsiAmericas public shareholders
(using available Whitman cash of $75.0 million and
increased long-term debt of $24.1 million).............. 99.1
Accrue transaction costs incurred by Whitman.............. 6.3
-------
Initial acquisition costs, excluding contingent payment... 275.6
-------
Allocation of acquisition costs:
Net assets of PepsiAmericas............................... 105.7
Less: intangible assets (184.4)
-------
Net tangible liabilities of PepsiAmericas............... (78.7)
Accrue transaction costs incurred by PepsiAmericas........ (6.4)
Adjust fair value of the Delta Beverage Senior Unsecured
Notes................................................... (4.9)
Write-off of deferred financing costs associated with
refinanced debt......................................... (3.3)
Eliminate unrecognized actuarial loss..................... 0.8
-------
(92.5)
-------
Excess of acquisition costs over estimated fair values of
assets and liabilities.................................... $ 368.1
=======
</TABLE>
ADDITIONAL INFORMATION ABOUT THE ACQUISITION COSTS IS AS FOLLOWS:
- The number of shares to be issued by Whitman to Dakota Holdings will
depend on the Whitman reference price. For purposes of this pro forma
financial information, the number of shares to be issued is assumed to be
13.0 million shares, based on the average closing price of $13.0917 per
share for Whitman common stock for the 15 consecutive trading days ended
September 18, 2000. The number of shares to be issued initially to Dakota
Holdings will not be less than 10.6 million shares nor more than
13.0 million shares.
- Whitman intends to finance the cash requirements of the merger using
available cash, available capacity under its existing credit facilities or
by issuing additional debt securities under its $750 million shelf
registration statement. Whitman also intends to increase its existing
credit facilities for the short-term borrowing needs of the combined
Whitman and PepsiAmericas companies. Existing cash and available credit
facilities and debt capacity would also fund any anticipated refinancings
assumed in presenting this pro forma financial information.
- The accrual of estimated transaction costs is primarily attributable to
financial advisory fees of approximately $9.7 million with the remainder
associated with legal, accounting and other advisory fees and expenses
directly associated with the transaction.
- The value of the Delta Beverage Senior Unsecured Notes has been adjusted
to reflect the increase in present value of amounts to be paid in the
future using Whitman's estimated current borrowing cost. The adjustment
assumes the Senior Unsecured Notes will be called at par on December 15,
2002. The Delta Beverage Senior Unsecured Notes currently carry a stated
interest rate of 9.75 percent compared to Whitman's current borrowing
costs of 7.5 percent. A 1/8 percent change in the assumed rate would have
changed the adjustment to debt by
22
<PAGE>
$0.3 million and would have resulted in a $0.2 million change in annual
interest expense. The deferred financing costs were classified in other
assets.
- The remainder of the excess acquisition costs have been allocated to
intangibles, which are comprised of franchise rights and goodwill. Except
for the Delta Beverage Senior Unsecured Notes, Whitman believes the fair
values of assets and liabilities will approximate their carrying values.
- Any remaining deferred financing costs related to existing PepsiAmericas
debt to be refinanced have been eliminated.
(2) Record the redemption of the Delta Beverage Series AA preferred stock by
PepsiAmericas, as required in the merger agreement, plus accrued dividends.
The Delta Beverage preferred stock will be redeemed at the closing by
PepsiAmericas at $5,000 per share. The preferred stock redemption will be
financed as previously discussed.
(3) Whitman has agreed to sell, in the aggregate, up to 1,710,863 shares of its
common stock, at a price of $14.6125 per share, to the PepsiAmericas
shareholders who participate in the contingent payment alternative. We have
assumed that none of these shares will be sold because the Whitman
reference price is below $14.6125. To the extent that these shares are
sold, the proceeds will be used to retire long-term debt.
INCOME STATEMENT ADJUSTMENTS
(4) Pro forma adjustments do not include any benefits that may result from
synergies of combining the operations of Whitman and PepsiAmericas,
including the termination of any management fees paid by PepsiAmericas.
(5) Record incremental amortization resulting from the excess of the purchase
price over the fair value of the assets and liabilities acquired or assumed
in the transaction using a forty-year amortization period. The principal
factors considered in determining the amortization period include: (a) the
franchise agreements are granted in perpetuity and provide the exclusive
right to distribute PepsiCo branded products in the acquired territories,
and (b) the existing and projected cash flows are adequate to support the
carrying values of the intangible assets.
(6) Record the net increase in interest expense incurred on funds used to
purchase the shares acquired from the PepsiAmericas' shareholders electing
the cash alternative and to redeem the Delta Beverage Series AA preferred
stock. Funds borrowed were assumed to carry Whitman's estimated borrowing
cost of 7.5 percent.
In addition, interest expense was reduced because the existing credit
facilities of PepsiAmericas will be paid off in connection with the merger.
Whitman intends to refinance the current borrowings with new credit
facilities, which are expected to carry interest rates approximately 150
basis points lower due to the combination. Credit facilities in use by
PepsiAmericas at June 30, 2000 were approximately $171.6 million.
23
<PAGE>
The summary of net additional borrowings/(repayments) and the effect on
1999 interest expense are as follows:
<TABLE>
<S> <C>
PepsiAmericas shares surrendered for cash................... $ 24.1
Delta Beverage Series AA share redemption................... 32.7
------
Net increase in borrowings................................ 56.8
Whitman's assumed borrowing cost............................ x 7.5%
------
Subtotal.................................................. 4.3
Lower interest expense on credit facilities (150 basis
points on $171.6 million)................................. (2.6)
Lower effective interest on the $120 million Delta Beverage
Senior Unsecured Notes with a stated rate of 9.75% versus
Whitman's borrowing cost of 7.5%.......................... (2.3)
Remove interest income on $75.0 million available cash paid
to PepsiAmericas public shareholders...................... 3.6
Remove impact of deferred financing costs................... (0.2)
------
Pro forma incremental annual interest expense............... $ 2.8
======
</TABLE>
The pro forma interest expense is based upon Whitman's current borrowing
rates. A 1/8 percent change in those rates would have changed the pro forma
interest expense by $0.5 million or $0.3 million after taxes.
(7) Record the income tax effect of the pro forma adjustments, using Whitman's
incremental combined U.S. Federal and state effective tax rate of
39.3 percent.
(8) Remove the impact of dividends paid on the Delta Beverage Series AA
preferred stock, which are included as part of minority interest by
PepsiAmericas.
(9) The pro forma combined column includes the shares issued to Dakota Holdings
based on the provisions of the merger using the assumed Whitman reference
price of $13.0917. It is assumed the share subscription would not be
exercised at a price below the share subscription price of $14.6125. The
pro forma financial information assumes PepsiAmericas shareholders, other
than Dakota Holdings, elect to receive the cash alternative and that the
Whitman reference price is $13.0917. The following table reflects the
expected shares to be issued initially as consideration under the three
alternatives. The shares presented assume the PepsiAmericas public
shareholders as a group select the cash, contingent payment or stock
alternatives. The PepsiAmericas shares held by Dakota Holdings will be
exchanged for Whitman common stock and will participate in the contingent
payment alternative. The following share amounts are presented in millions
and exclude any share amounts related to the share subscription described
in note (3) above:
<TABLE>
<CAPTION>
PUBLIC
PUBLIC ELECTS PUBLIC
ELECTS CONTINGENT ELECTS
CASH PAYMENT STOCK
-------- ---------- --------
<S> <C> <C> <C>
Whitman reference price
#$13.15............................................. 13.0 18.6 20.6
$14.61.............................................. 11.7 16.7 18.5
a$16.07............................................. 10.7 15.2 16.8
</TABLE>
24
<PAGE>
Additionally, shares potentially issuable in the future under the contingent
payment alternative would be as follows:
<TABLE>
<CAPTION>
PUBLIC
PUBLIC ELECTS PUBLIC
ELECTS CONTINGENT ELECTS
CASH PAYMENT STOCK
-------- ---------- --------
<S> <C> <C> <C>
Whitman reference price
#$13.15............................................. 7.0 9.9 7.0
$14.61.............................................. 6.3 9.0 6.3
a$16.07............................................. 5.7 8.2 5.7
</TABLE>
(10) In 1999, Whitman entered into a new business relationship with PepsiCo,
Inc. pursuant to which Pepsi-Cola General Bottlers sold its franchises in
Marion, Virginia; Princeton, West Virginia; and the St. Petersburg area of
Russia, to PepsiCo and Pepsi-Cola General Bottlers acquired from PepsiCo its
domestic franchises in Cleveland, Ohio; Dayton, Ohio; Indianapolis, Indiana;
St. Louis, Missouri and southern Indiana, and international franchises in
Hungary, the Czech Republic, the Republic of Slovakia and Poland. These
acquisitions were accounted for under the purchase method. Accordingly, the
results of operations of the acquired territories have been included with
those of Whitman for periods subsequent to the dates of acquisition.
The Whitman pro forma combined statements of income for 1999 assume the
following:
- The territories in Marion, Virginia; Princeton, West Virginia; and Russia,
which were divested in connection with the transaction, are assumed to
have been sold as of the beginning of fiscal 1999.
- The domestic and Central European territories were acquired from PepsiCo
as of the beginning of fiscal 1999.
- The 16 million share repurchase commitment entered into in connection with
the new business relationship was completed as of January 1, 1999.
(11) On July 17, 1998, Dakota Holdings (formerly P-PR Transfer, LLP a
partnership principally owned by Pohlad Companies), acquired a controlling
interest in PepsiAmericas. Effective with the change in control,
PepsiAmericas and two related party entities, Delta Beverage and Dakota
Beverage shared common ownership and were under the common control of Pohlad
Companies. On June 28, 1999, PepsiAmericas entered into share exchange
agreements with the shareholders of Delta Beverage and Dakota Beverage.
On October 15, 1999, PepsiAmericas issued common shares in connection with
the acquisition of Delta Beverage and Dakota Beverage, pursuant to the share
exchange agreements. The share exchange transactions were accounted for as a
combination of entities under common control. Accordingly, the common equity
interests of Delta Beverage and Dakota Beverage owned by Pohlad Companies
(representing 23.2% of Delta Beverage and 100% of Dakota Beverage) were
combined at historical cost, and the remaining common equity interests in
Delta Beverage were acquired at fair value and accounted for using the
purchase method of accounting.
The PepsiAmericas pro forma combined statement of income for 1999 assumes
the following:
- A reduction in the management fees paid to Pohlad Companies to an amount
effective as of October 15, 1999.
- The adjustment of the Delta Beverage Senior Unsecured Notes to fair value,
including a reduction in deferred financing costs.
25
<PAGE>
- Refinancing of certain other existing indebtedness of PepsiAmericas, Delta
Beverage and Dakota Beverage.
- Declaration of Delta Beverage preferred stock dividends reflected as
minority interest expense.
- Income tax effect of the combination of PepsiAmericas, Delta Beverage and
Dakota Beverage, including the tax effect of the pro forma adjustments.
Prior to the common control merger, Dakota Beverage operated as a
subchapter S corporation for tax purposes; accordingly, it recorded no
historical tax provision. The pro forma income tax adjustment includes the
provision of income taxes for Dakota Beverage using PepsiAmericas'
incremental combined United States federal and state effective tax rate of
approximately 39%.
COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE INFORMATION
The shares of Whitman common stock principally trade on the NYSE, the
Chicago Stock Exchange and the Pacific Stock Exchange under the symbol "WH." The
shares of PepsiAmericas Class B common stock trade under the symbol "PAS." The
shares of PepsiAmericas Class A common stock do not trade in an established
trading market.
The closing price for Whitman common stock was:
- $13.75 on August 18, 2000, the last trading day before we announced the
execution of the merger agreement; and
- $[ ] on [date], 2000, the last trading day before the date of this joint
proxy statement/ prospectus.
The closing price for PepsiAmericas Class B common stock was:
- $4.75 on August 18, 2000, the last trading day before we announced the
execution of the merger agreement; and
- $[ ] on [date], 2000, the last trading day before the date of this joint
proxy statement/ prospectus.
Whitman declared a dividend of $0.04 per share payable on April 3, 2000.
Since December 31, 1999, PepsiAmericas has not declared any dividends on its
common stock.
The equivalent per share price (which is the value of the shares of Whitman
common stock a PepsiAmericas shareholder would have received for each share of
PepsiAmericas common stock owned if the merger had been completed and such
PepsiAmericas shareholder had exchanged shares of PepsiAmericas common stock for
shares of Whitman common stock on the dates listed) was
- $3.80 on August 18, 2000, the last day on which a trade occurred in shares
of PepsiAmericas Class B common stock before the execution of the merger
agreement; and
- $[ ] on [date], 2000, the last day on which a trade occurred in
shares of PepsiAmericas Class B common stock before the date of this joint
proxy statement/prospectus.
In the table below, we provide selected historical and unaudited pro forma
per share data for Whitman and historical and unaudited pro forma equivalent per
share data for PepsiAmericas. The data set forth below gives effect to the
merger using the purchase method of accounting. The PepsiAmericas pro forma
equivalent information is derived by multiplying the relevant combined pro forma
amount by an assumed exchange ratio of 0.2889. This ratio is based on an assumed
Whitman reference price of $13.0917. You should read the information set forth
below in conjunction with the
26
<PAGE>
historical consolidated financial information of Whitman and PepsiAmericas
incorporated by reference herein and Selected Financial Information on pages
14 and 16.
<TABLE>
<CAPTION>
PEPSIAMERICAS
WHITMAN PEPSIAMERICAS COMBINED PRO FORMA
HISTORICAL HISTORICAL PRO FORMA EQUIVALENT
---------- ------------- --------- -------------
<S> <C> <C> <C> <C>
Book value per common share
June 30, 2000................................ $8.43 $ 1.21 $8.78 $2.54
December 31, 1999............................ $8.21 $ 1.26 $8.63 $2.49
Income from continuing operations
Income (loss) per common share--basic:
June 30, 2000.............................. $0.30 $(0.04) $0.24 $0.07
December 31, 1999.......................... $0.35 $(0.10) $0.18 $0.05
Income (loss) per common share--diluted:
June 30, 2000.............................. $0.30 $(0.04) $0.24 $0.07
December 31, 1999.......................... $0.35 $(0.10) $0.18 $0.05
Cash dividend per share
June 30, 2000.............................. $0.04 -- $0.04 $0.01
December 31, 1999.......................... $0.08 -- $0.08 $0.02
</TABLE>
27
<PAGE>
RISK FACTORS
In addition to the other information included in this joint proxy
statement/prospectus, including the matters addressed in "Cautionary Statement
Concerning Forward-Looking Statements," Whitman and PepsiAmericas shareholders
should consider the following in determining how to vote their shares at the
applicable special meeting.
IF PEPSIAMERICAS DOES NOT EXCEED ITS PROJECTED PERFORMANCE LEVELS THROUGH THE
END OF 2002, THE MAXIMUM NUMBER OF SHARES OF WHITMAN COMMON STOCK TO BE PAID TO
SHAREHOLDERS PARTICIPATING IN THE CONTINGENT PAYMENT ALTERNATIVE WILL NOT BE
PAID
The contingent payment alternative has been structured so that participating
PepsiAmericas shareholders will receive, upon the closing of the merger,
consideration valued at less than the consideration to be received by
shareholders participating in the cash and stock alternatives. PepsiAmericas
shareholders participating in the contingent payment alternative will have the
opportunity to receive additional consideration in the future that, when added
to the consideration received upon the closing of the merger, could exceed the
value of the consideration to be received by shareholders participating in the
cash and stock alternatives.
Whether or not PepsiAmericas shareholders participating in the contingent
payment alternative receive additional shares of Whitman common stock will
depend on PepsiAmericas' performance for each of fiscal years 2001 and 2002 and
for the three-year period beginning January 2, 2000. The relevant performance
levels are based on estimates made by PepsiAmericas' management of EBITDA for
these periods. These forecasts are discussed under the caption "The
Merger--Certain Financial Projections (unaudited)."
In order for PepsiAmericas shareholders participating in the contingent
payment alternative to receive merger consideration in value equal to that
received by shareholders participating in the cash and stock alternatives
(valuing Whitman common stock at the Whitman reference price), PepsiAmericas
will need to meet these forecasts. In order for PepsiAmericas shareholders
participating in the contingent payment alternative to receive merger
consideration with a value greater than that received by shareholders
participating in the cash and stock alternatives (valuing Whitman common stock
at the Whitman reference price), PepsiAmericas will need to exceed these
estimates.
VALUE OF WHITMAN COMMON STOCK TO BE RECEIVED IN THE MERGER MAY FLUCTUATE
Because the price of Whitman common stock fluctuates, the actual value of
the merger consideration received by any holder of PepsiAmericas common stock
who chooses the cash or stock alternatives could be less than or greater than
$3.80 per share.
The consideration to be received by PepsiAmericas' shareholders in the
merger will depend, in part, on the average closing price of Whitman common
stock during the 15 consecutive trading days ending on the fifth trading day
immediately prior to the earlier of the Whitman special meeting or the
PepsiAmericas special meeting. We refer to this average as the Whitman reference
price. Holders of PepsiAmericas common stock who choose the cash or stock
alternatives will receive, for each share, $3.80 in value in cash or in shares
of Whitman common stock (based on the Whitman reference price), as applicable,
so long as the Whitman reference price is between $13.1513 and $16.0738. If the
Whitman reference price is less than $13.1513, the holders of PepsiAmericas
common stock who choose the cash or stock alternatives will receive a value less
than $3.80. If the Whitman reference price is greater than $16.0738, the holders
of PepsiAmericas common stock who choose the cash or stock alternatives will
receive a value greater than $3.80.
Similarly, holders of PepsiAmericas common stock who select the contingent
payment alternative will receive at the effective time of the merger, for each
share, $2.80 in value in shares of Whitman
28
<PAGE>
common stock (based on the Whitman reference price), so long as the Whitman
reference price is between $13.1513 and $16.0738. If the Whitman reference price
is less than $13.1513, the holders of PepsiAmericas common stock who choose the
contingent payment alternative will receive consideration at the effective time
of the merger valued at less than $2.80. If the Whitman reference price is
greater than $16.0738, the holders of PepsiAmericas common stock who choose the
contingent payment alternative will receive consideration at the effective time
of the merger valued at more than $2.80.
Furthermore, because the merger and the issuance of stock and contingent
payments, if any, will occur after the Whitman reference price has been
calculated, we cannot assure you that the Whitman reference price will reflect
the market price of Whitman common stock at the effective time of the merger, at
the time shares of Whitman common stock are issued in connection with the merger
or at the time stock and contingent payments are made. Accordingly, the market
price of each share of Whitman common stock that you receive may be more or less
than its value when the Whitman reference price is calculated, at the time of
the special meetings or at the effective time of the merger. The market price of
Whitman common stock is affected by various factors including raw material
costs, competitive pressures, employee matters, currency fluctuations,
governmental regulations, and environmental matters, to name just a few.
THE VALUE OF THE CONSIDERATION TO BE RECEIVED MAY CHANGE IF THE PRICE OF WHITMAN
COMMON STOCK DIFFERS BETWEEN THE DATE THAT THE WHITMAN REFERENCE PRICE IS
DETERMINED AND THE DATE A FORM OF CONSIDERATION IS ELECTED
The dollar amount of the cash consideration will not change, but it may be
greater or less than the value of the Whitman common stock PepsiAmericas
shareholders could receive under the stock alternative or the contingent payment
alternative. The Whitman reference price will be determined at the end of the
fifth trading day immediately prior to the earlier of the Whitman special
meeting or the PepsiAmericas special meeting. You will have until ten business
days after the completion of the merger to elect the form of consideration that
you desire. Because the value of Whitman common stock may fluctuate between the
date that the Whitman reference price is determined and the date that
PepsiAmericas shareholders make your election, the value of the cash alternative
may be greater or less than the value of the Whitman common stock PepsiAmericas
shareholders could receive under the stock alternative or the contingent payment
alternative.
CONTINGENT PAYMENTS MAY NOT BE ASSIGNED OR TRANSFERRED
The right of each contingent payment record holder to receive additional
shares of Whitman common stock pursuant to the provisions of the merger
agreement may not be assigned or transferred in any manner whatsoever, except by
operation of law or by will. In no event will any right to contingent payments
be evidenced by negotiable certificates of any kind. Accordingly, if a holder of
PepsiAmericas common stock elects that alternative for some or all of his or her
PepsiAmericas shares and later sells the Whitman shares received upon completion
of the merger, such holder, and not the person who purchases such holder's
Whitman shares, will receive additional shares of Whitman common stock if the
specified performance levels are met.
SHAREHOLDERS WHO ELECT TO RECEIVE CASH MAY RECEIVE STOCK FOR A PORTION OF THEIR
SHARES
Because of possible proration in order to preserve the tax-free nature of
the transaction for shareholders who receive Whitman common stock for their
PepsiAmericas common stock, holders of PepsiAmericas common stock who elect the
cash alternative may receive a portion of the merger consideration in Whitman
common stock.
29
<PAGE>
INTEGRATION OF WHITMAN AND PEPSIAMERICAS OPERATIONS MAY BE DIFFICULT
After the merger, Whitman will need to integrate the operations of its
current business and the operations of PepsiAmericas. Whitman's existing
operations and PepsiAmericas' operations may have been operated differently in
the past and this integration may be more expensive than anticipated or take
longer than planned. If there are delays or unexpected costs involved with the
integration, this could have a material adverse effect on Whitman's business and
financial results.
PEPSICO HAS SIGNIFICANT INFLUENCE ON WHITMAN
The combination of PepsiCo's rights as a significant shareholder and its
position as a critical supplier gives PepsiCo significant influence on Whitman.
PepsiCo owns approximately 40% of the outstanding common stock of Whitman and
has two designees on the Whitman board of directors. PepsiCo's ownership
percentage entitles it to call special meetings of Whitman shareholders under
the Whitman bylaws. Under the amended and restated shareholder agreement between
PepsiCo and Whitman, which will be entered into upon the consummation of the
merger, PepsiCo and Pohlad Companies, together with their respective affiliates,
can own up to 49.9% of the outstanding shares of Whitman common stock.
IT WILL BE EXTREMELY DIFFICULT FOR A THIRD PARTY TO ACQUIRE CONTROL OF WHITMAN
WITHOUT THE COOPERATION OF PEPSICO
Because PepsiCo is the owner of a substantial equity interest, and a
critical supplier of Whitman, it would be extremely difficult to acquire Whitman
without PepsiCo's consent. In addition, Whitman has several takeover defenses in
its corporate documents. These defenses could discourage potential acquisition
proposals and could delay or prevent a change in control of Whitman. These
deterrents could affect the price of Whitman common stock and make it extremely
difficult to remove or replace members of the board of directors or management
of Whitman without the cooperation of PepsiCo.
WHITMAN DEPENDS ON SUPPLIES AND MARKETING SUPPORT THAT PEPSICO PROVIDES ON TERMS
WITHIN PEPSICO'S SOLE DISCRETION
Whitman relies heavily on supplies and marketing support that PepsiCo
supplies on terms within its sole discretion. Whitman has several bottling
agreements with PepsiCo for cola and non-cola and fountain beverage products.
These agreements provide that Whitman must purchase all of its concentrate for
these beverages at prices and on other terms which are set by PepsiCo in its
sole discretion. Prices under these agreements may increase materially and
Whitman may not be able to pass on the increased costs to its customers. PepsiCo
has traditionally provided marketing support and funding to its bottling
operations. However, while PepsiCo has indicated to Whitman that it intends to
continue to provide this support, PepsiCo is not obligated under the bottling
agreements to do so. Any support provided to Whitman will be at PepsiCo's sole
discretion. Any concentrate price increases or decreases in marketing support
and funding levels could have a material adverse effect on Whitman's business
and financial results.
PEPSICO COULD TERMINATE ITS BOTTLING AGREEMENTS WITH WHITMAN
The bottling agreements require Whitman to submit its annual sales,
marketing, advertising, management and financial plans each year to PepsiCo for
its review and approval. If Whitman fails to submit these plans or fails to
carry them out in all material respects, PepsiCo may terminate the bottling
agreements. If PepsiCo terminates the bottling agreements for this or any other
reason, it would have a material adverse effect on Whitman's business and
financial results.
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THERE MAY BE CONFLICTS OF INTEREST BETWEEN WHITMAN AND PEPSICO
The nature of the relationship between Whitman and PepsiCo and their
respective businesses may give rise to conflicts of interest between them.
Whitman will enter into additional significant business transactions in the
future with PepsiCo. While we expect the terms of these transactions will be
negotiated at arm's-length, potential conflicts of interest could arise due to
PepsiCo's significant ownership percentage in Whitman. These potential conflicts
could relate to:
- the nature, quality and pricing of services or products provided to
Whitman by PepsiCo or by PepsiCo to Whitman;
- potential acquisitions of bottling territories and/or assets from PepsiCo
or other independent Pepsi Cola bottlers;
- the divestiture of any of Whitman's bottling operations;
- the payment of dividends by Whitman; or
- balancing the objectives of increasing sales volume of Pepsi-Cola
beverages and maintaining or increasing Whitman's profitability.
In addition, two members of Whitman's board of directors are also directors
or officers of PepsiCo. This could also give rise to conflicts of interest.
Whitman's bylaws provide for an affiliated transactions committee comprised of
independent directors to review specified transactions with PepsiCo and its
affiliates.
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
This joint proxy statement/prospectus contains or incorporates by reference
forward-looking statements made pursuant to the safe harbor provisions of
Section 27A of the Securities Act of 1933, and Section 21E of the Securities
Exchange Act of 1934 that reflect management's expectations, estimates and
assumptions, based on information available at the time this joint proxy
statement/ prospectus, or any document that is incorporated into this joint
proxy statement/prospectus by reference, was prepared. These forward-looking
statements include, but are not limited to, statements regarding future events
and plans, goals, objectives and expectations. When used in this joint proxy
statement/prospectus, the words "anticipate," "believe," "estimate," "expect,"
"plan," "intend" and similar expressions are intended to identify
forward-looking statements.
Forward-looking statements involve risks, uncertainties and other factors
which may cause the actual performance or achievements to be materially
different from any future results, performance or achievements expressed or
implied by those statements. These risks, uncertainties and other factors
include, but are not limited to, the following: competition, including product
and pricing pressures; changing trends in consumer tastes; changes in each
companies' relationship and/or support programs with PepsiCo and other brand
owners; market acceptance of new product offerings; weather conditions; cost and
availability of raw materials; availability of capital; labor and employee
benefit costs; interest rate and currency fluctuations; costs of legal
proceedings; outcomes of environmental claims and litigation, and general
economic, business and political conditions in the countries and territories
where we operate. Others may be discussed in the documents we incorporate into
this joint proxy statement/ prospectus by reference. These events and
uncertainties are difficult or impossible to predict accurately and many are
beyond management's control.
The inclusion of forward-looking statements should not be regarded as a
representation that the future expectations, estimates and assumptions either
company contemplates will be achieved. Furthermore, past performance in
operations and share price is not necessarily predictive of future performance.
Neither company assumes any obligation to publicly release the result of any
revisions that may be made to any forward-looking statements to reflect events
or circumstances after the date of
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those statements or to reflect the occurrence of anticipated or unanticipated
events. You are cautioned not to place undue reliance on forward-looking
statements.
The cautionary statements set forth above also apply to all subsequent
forward-looking statements attributable to Whitman or PepsiAmericas or any
person acting on their behalf relating to the matters we describe in this joint
proxy statement/prospectus.
THE SPECIAL MEETINGS
We are furnishing this joint proxy statement/prospectus in connection with
the solicitation of proxies by each of the Whitman and PepsiAmericas board of
directors relating to the merger agreement and the transactions contemplated by
the merger agreement. We are first sending this joint proxy statement/prospectus
to shareholders of Whitman and PepsiAmericas on or about [date], 2000. You
should read this joint proxy statement/prospectus carefully before voting your
shares.
DATE, TIME AND PLACE OF THE SPECIAL MEETINGS
The special meetings are scheduled to be held as follows:
<TABLE>
<S> <C>
FOR WHITMAN SHAREHOLDERS: FOR PEPSIAMERICAS SHAREHOLDERS:
[date], 2000 [date], 2000
[time] a.m., local time [time] a.m., local time
[location] Marquette Hotel
710 Marquette Avenue
Minneapolis, Minnesota, 55402
</TABLE>
WHAT YOU WILL VOTE ON
WHITMAN. At the Whitman special meeting, we will ask Whitman shareholders
to consider and vote upon approval of the issuance of shares of Whitman common
stock as provided by the merger agreement. Whitman shareholders will also vote
upon any other business that may properly come before the Whitman special
meeting or any adjournment or postponement of that meeting.
PEPSIAMERICAS. At the PepsiAmericas special meeting, we will ask
PepsiAmericas shareholders to consider and vote upon adoption of the merger
agreement. PepsiAmericas shareholders will also vote upon any other business
that may properly come before the PepsiAmericas special meeting or any
adjournment or postponement of that meeting.
SHAREHOLDER RECORD DATES FOR THE SPECIAL MEETINGS
WHITMAN. The Whitman board of directors has fixed the close of business on
[date], 2000 as the record date for determining the Whitman shareholders
entitled to notice of and to vote at the Whitman special meeting. On [date],
2000, there were [number] shares of Whitman common stock outstanding held by
approximately [number] holders of record.
PEPSIAMERICAS. The PepsiAmericas board of directors has fixed the close of
business on [date], 2000 as the record date for determining the PepsiAmericas
shareholders entitled to notice of and to vote at the PepsiAmericas special
meeting. On [date], 2000 there were 5,000,000 shares of PepsiAmericas Class A
common stock and 82,314,377 shares of PepsiAmericas Class B common stock
outstanding held by two and approximately 2,221 holders of record, respectively.
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QUORUM
WHITMAN. The attendance in person or by proxy of the holders of 51% of the
shares of Whitman common stock entitled to vote at the Whitman special meeting
will constitute a quorum.
PEPSIAMERICAS. A majority of the shares entitled to vote must be present in
person or by proxy to constitute a quorum at the PepsiAmericas special meeting.
VOTE REQUIRED FOR APPROVAL
WHITMAN. Approval of the issuance of Whitman common stock as provided by
the merger agreement requires the affirmative vote of the holders of a majority
of the votes cast on the matter at the Whitman special meeting (provided that a
quorum is present). Each share of Whitman common stock is entitled to cast one
vote. As of [date], 2000, the directors and executive officers of Whitman and
their affiliates, excluding PepsiCo, owned and were entitled to vote [number]
shares (or [ ]%) of Whitman common stock. PepsiCo holds, directly or
indirectly, approximately 55 million shares of Whitman common stock (or
approximately 40% of the outstanding Whitman common stock as of [date], 2000)
and has agreed to vote in favor of the proposal to approve the issuance of
Whitman common stock.
PEPSIAMERICAS. Adoption of the merger agreement requires the affirmative
vote of the holders of a majority of the voting power of the outstanding
PepsiAmericas common stock. Each share of PepsiAmericas Class A common stock is
entitled to cast six votes. Each share of PepsiAmericas Class B common stock is
entitled to cast one vote. As of [date], 2000, the directors and executive
officers of PepsiAmericas and their affiliates owned and were entitled to vote
5,000,000 shares of PepsiAmericas Class A common stock and 59,240,813 shares of
PepsiAmericas Class B common stock (or approximately 79% of the voting power of
the outstanding shares of PepsiAmericas common stock). Dakota Holdings holds
4,000,000 shares of PepsiAmericas Class A common stock and 57,078,274 shares of
PepsiAmericas Class B common stock (or approximately 72% of the voting power of
the outstanding shares of PepsiAmericas common stock) and has agreed to vote in
favor of the proposal to adopt the merger agreement, thereby ensuring that
PepsiAmericas shareholders will approve this proposal.
VOTING YOUR SHARES
WHITMAN. All shares of Whitman common stock represented by properly
executed proxies or voting instruction forms received before or at the Whitman
special meeting will, unless the proxies or voting instructions are revoked, be
voted in accordance with the instructions indicated on those proxies or voting
instructions. If no instructions are indicated on a properly executed proxy card
or voting instruction form, the shares will be voted FOR approval of the share
issuance. You are urged to mark the box on the proxy card and/or voting
instructions to indicate how to vote your shares.
If a properly executed proxy card or voting instruction form is returned and
the shareholder has abstained from voting on any matter, the Whitman common
stock represented by the proxy or voting instructions will be considered present
at the special meeting for purposes of determining a quorum. If your shares are
held in an account at a brokerage firm or bank, you must instruct the firm or
bank on how to vote your shares. If an executed proxy card is returned by a
broker or bank holding shares which indicates that the broker or bank does not
have discretionary authority to vote at the special meeting, the shares will be
considered present at the meeting for purposes of determining the presence of a
quorum, but will not be counted as votes "for" or "against" the share issuance.
This means that abstentions and broker non-votes will have no effect on the
proposal, except for purposes of determining a quorum.
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No other matters other than those mentioned above are expected to be brought
before the Whitman special meeting. If, however, other matters are presented,
the persons named as proxies will vote in accordance with their judgment with
respect to those matters.
A shareholder may revoke his or her proxy at any time before it is voted by:
- notifying in writing the Corporate Secretary of Whitman Corporation at
3501 Algonquin Road, Rolling Meadows, Illinois 60008;
- submitting a subsequently dated proxy; or
- appearing in person and voting at the special meeting if such shareholder
is a holder of record.
To vote in person at the Whitman special meeting, shareholders must attend
the meeting and cast their votes in accordance with the procedures at the
special meeting. Attendance at the special meeting will not in and of itself
constitute revocation of a proxy.
PEPSIAMERICAS. All shares of PepsiAmericas common stock represented by
properly executed proxies or voting instruction forms received before or at the
PepsiAmericas special meeting will, unless the proxies or voting instruction
forms are revoked, be voted in accordance with the instructions indicated on
those proxies or voting instruction forms. If no instructions are indicated on a
properly executed proxy card or voting instruction form, the shares will be
voted FOR adoption of the merger agreement. You are urged to mark the box on the
proxy card and/or voting instruction form to indicate how to vote your shares.
If a properly executed proxy card or voting instruction form is returned and
the shareholder has abstained from voting on any matter, the PepsiAmericas
common stock represented by the proxy card or voting instruction form will be
considered present at the special meeting for purposes of determining a quorum.
If your shares are held in an account at a brokerage firm or bank, you must
instruct the firm or bank on how to vote your shares. If an executed proxy card
is returned by a broker or bank holding shares which indicates that the broker
or bank does not have discretionary authority to vote at the special meeting,
the shares will be considered present at the meeting for purposes of determining
the presence of a quorum. Your broker or bank will vote your shares only if you
provide instructions on how to vote by following the information provided to you
by your broker. This means that abstentions and broker non-votes will have the
same effect as a vote against the adoption of the merger agreement.
We do not expect any matters other than those mentioned above to be brought
before the special meeting. If, however, other matters are presented, the
persons named as proxies will vote in their discretion with respect to those
matters.
A shareholder may revoke his or her proxy at any time before it is voted by:
- notifying in writing the Secretary of PepsiAmericas Inc. at 3800 Dain
Rauscher Plaza, 60 South Sixth Street, Minneapolis, Minnesota 55402;
- submitting a subsequently dated proxy; or
- appearing in person and voting at the special meeting if such shareholder
is a holder of record.
To vote in person at the PepsiAmericas special meeting, shareholders must
attend the meeting and cast their votes in accordance with the procedures at the
special meeting. Attendance at the special meeting will not in and of itself
constitute revocation of a proxy.
COST OF SOLICITATION
Whitman and PepsiAmericas will share equally the expenses incurred in
connection with the printing and mailing of this joint proxy
statement/prospectus. Whitman has retained [ ],
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for a fee of $[ ] plus additional charges related to telephone calls
and other services, to assist in the solicitation of proxies. PepsiAmericas has
retained Georgeson Shareowner Services, at an estimated cost of $8,500 plus
reimbursement of expenses, to assist in the solicitation of proxies. Whitman,
PepsiAmericas and their respective proxy solicitors will also request banks,
brokers and other intermediaries holding shares of Whitman or PepsiAmericas
common stock beneficially owned by others to send this joint proxy
statement/prospectus to, and obtain proxies from, the beneficial owners and will
reimburse the holders for their reasonable expenses in so doing. Solicitation of
proxies by mail may be supplemented by telephone, telegram and other electronic
means, advertisements and personal solicitation by the directors, officers or
employees of Whitman and PepsiAmericas. No additional compensation will be paid
to directors, officers or employees for such solicitation.
PEPSIAMERICAS SHAREHOLDERS SHOULD NOT SEND IN THEIR STOCK CERTIFICATES WITH
THEIR PROXY CARDS AND/OR VOTING INSTRUCTIONS. FOR INFORMATION REGARDING WHAT TO
DO WITH PEPSIAMERICAS SHARE CERTIFICATES, PEPSIAMERICAS SHAREHOLDERS SHOULD
REVIEW "THE MERGER AGREEMENT--EXCHANGE AGENT; PROCEDURES FOR EXCHANGE OF
CERTIFICATES."
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THE MERGER
This section of the joint proxy statement/prospectus describes material
aspects of the proposed merger, including the merger agreement. While we believe
that the description covers the material terms of the merger, this summary may
not contain all of the information that is important to you. You should
carefully read this entire joint proxy statement/prospectus and the other
documents we refer to for a more complete understanding of the merger. In
addition, we incorporate by reference important business and financial
information about each of us into this joint proxy statement/prospectus. You may
obtain the information that we incorporate by reference without charge by
following the instructions in the section entitled "Where You Can Find More
Information."
THE COMPANIES
WHITMAN CORPORATION
Whitman manufactures, packages, sells and distributes carbonated and
non-carbonated Pepsi-Cola beverages and a variety of other non-alcoholic
beverages in the United States and Central Europe through its principal
operating company, Pepsi-Cola General Bottlers, Inc.
In 1999, Whitman entered into a new business relationship with PepsiCo
pursuant to which Pepsi-Cola General Bottlers sold its franchises in Marion,
Virginia, Princeton, West Virginia and the St. Petersburg area of Russia to
PepsiCo and Pepsi-Cola General Bottlers acquired from PepsiCo its domestic
franchises in Cleveland, Ohio, Dayton, Ohio, Indianapolis, Indiana, St. Louis,
Missouri and southern Indiana, and international franchises in Hungary, the
Czech Republic, the Republic of Slovakia and Poland. The new business
relationship has resulted in PepsiCo holding approximately 40% of Whitman's
common stock.
Whitman accounts for about 17% of all Pepsi-Cola products sold in the United
States. Whitman serves a significant portion of a ten state region, primarily in
the Midwest, with a population of approximately 35 million people. In addition,
Whitman serves a population of approximately 65 million people in its
territories in Poland, Hungary, the Czech Republic and the Republic of Slovakia.
Whitman sells a variety of brands that it bottles under licenses from
PepsiCo or PepsiCo joint ventures. These brands include Pepsi-Cola, Diet Pepsi,
Mountain Dew, Lipton Brisk, Lipton Iced Tea, Pepsi Max, Pepsi One, Slice, Mug,
Aquafina, Starbucks Frappucino and 7Up and Mirinda in its Central European
operations. In some territories, Whitman manufactures, packages, sells and
distributes products under brands licensed from companies other than PepsiCo,
including Dr. Pepper, 7Up and Hawaiian Punch in the United States and Schweppes
Tonic, Orange, Lemon and Ginger Ale products in Central Europe.
While Whitman manages all phases of its operations, including pricing of its
products, information regarding production, marketing and distribution is
exchanged with PepsiCo, benefiting both companies' respective efforts to lower
costs, improve productivity and increase product sales.
The owners of beverage brands either manufacture and sell products
themselves or appoint bottlers to sell, distribute and, in some cases,
manufacture these products under license. Brand owners, such as PepsiCo,
generally own both the beverage trademarks and the secret formulas for the
concentrates, which they also manufacture and sell to their licensed bottlers.
Brand owners also develop new products and packaging for use by their bottlers.
Brand owners develop national marketing, promotion and advertising programs to
support their brands and brand image, and coordinate selling efforts with
respect to national fountain, supermarket and mass merchandising accounts. They
also provide local marketing support to their bottlers.
Bottlers such as Whitman are generally responsible for manufacturing,
packaging, selling and distributing products under the brand names they license
from brand owners in their exclusive
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territories. For carbonated soft drink products, the bottler combines soft drink
concentrate with sweeteners and carbonated water and packages this mixture in
bottles or cans. Bottlers may also have licenses to manufacture syrup for sale
to fountain accounts. Under these licenses, bottlers combine soft drink
concentrate with sweeteners to manufacture syrup for delivery to fountain
customers. For non-carbonated beverages, the bottler either manufactures and
packages the beverages or purchases the beverages in finished form and sells
them through its distribution system.
The primary distribution channels for the retail sale of carbonated soft
drink products are supermarkets, mass merchandisers, vending machines,
convenience stores, gas stations, fountain channels, such as restaurants or
cafeterias, and other channels, such as small groceries, drug stores and
educational institutions. The largest channel in the United States is
supermarkets, but Whitman's fastest growing channels have been mass
merchandisers, the cold drink channel, which includes sales through vending
machines, coolers and fountain equipment, convenience stores and gas stations.
Depending upon the size of the bottler and the particular market, a bottler
delivers products through these channels using either a direct-to-store delivery
system or a warehouse distribution system. In its exclusive territories, each
bottler is responsible for selling products and providing timely service to its
existing customers and identifying and obtaining new customers. Bottlers are
also responsible for local advertising and marketing, as well as the execution
in their territories of national and regional selling programs instituted by
brand owners. The bottling business is capital intensive. Manufacturing
operations require specialized high-speed equipment, and distribution requires
extensive placement of fountain equipment and cold drink vending machines and
coolers, as well as investment in trucks and warehouse facilities.
Whitman previously engaged in the refrigeration systems and equipment
business conducted through Hussmann International, Inc. and in the automotive
services business through Midas, Inc. On January 30, 1998, Whitman distributed
all of the common stock of Hussmann and Midas to its shareholders in tax-free
spin-offs.
Whitman's principal executive offices are located at 3501 Algonquin Road,
Rolling Meadows, Illinois 60008. Its telephone number is (847) 818-5000.
PEPSIAMERICAS, INC.
PepsiAmericas and its subsidiaries manufacture, package, sell and distribute
a variety of carbonated and non-carbonated soft drink products and bottled water
in the United States and the Caribbean.
On July 17, 1998, P-PR Transfer LLP, a partnership owned by Pohlad Companies
and a wholly owned subsidiary of PepsiCo, acquired a controlling interest in
PepsiAmericas, formerly known as Pepsi-Cola Puerto Rico Bottling Company.
Effective with the change in control, PepsiAmericas and two other related party
entities, Delta Beverage Group, Inc. and Dakota Beverage Company, Inc., shared
common ownership and were under the common control of Pohlad Companies.
Effective October 15, 1999, pursuant to a reorganization, P-PR Transfer was
liquidated into Dakota Holdings and PepsiAmericas was combined with Delta
Beverage and Dakota Beverage in a transaction accounted for as a merger of
entities under common control. Together, PepsiCo and Pohlad Companies hold 100%
of the membership interests of Dakota Holdings. Dakota Holdings holds shares of
PepsiAmericas common stock having approximately 72% of the voting power of the
outstanding PepsiAmericas common stock. In conjunction with the closing of the
acquisitions of Delta Beverage and Dakota Beverage, PepsiAmericas obtained a
$185 million credit facility from a syndicate of banks led by Bank of America,
N.A. PepsiAmericas used the credit facility to pay costs related to such
acquisitions and to re-finance existing debt, with the remaining balance
available for working capital and future acquisitions.
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During 1999, PepsiAmericas completed two acquisitions. In July 1999,
PepsiAmericas acquired the franchise rights to 7Up and several other Cadbury
Schweppes brands in Puerto Rico for an aggregate cost of $12 million. In
December 1999, PepsiAmericas purchased the soft drink business of Desnoes and
Geddes, a PepsiCo franchisee in Jamaica, for a net cost of approximately
$22 million.
PepsiAmericas operates under exclusive franchise agreements with soft drink
brand owners, including master bottling and fountain syrup agreements with
PepsiCo, for the manufacture, packaging, sale and distribution of specified
Pepsi-Cola products in Puerto Rico, Jamaica and specified territories in the
United States. The franchise agreements contain operating and marketing
commitments and conditions for their termination. PepsiAmericas also distributes
beer and malt beverages pursuant to exclusive distributor agreements in a
limited portion of its territories. PepsiAmericas also distributes Cadbury
Schweppes brands in Puerto Rico.
PepsiAmericas' principal executive offices are located at 3800 Dain Rauscher
Plaza, 60 South Sixth Street, Minneapolis, Minnesota 55402. Its telephone number
is (612) 661-3830.
BACKGROUND OF THE MERGER
Whitman has had a business relationship with PepsiCo since 1970, when
Whitman, then known as IC Industries, Inc., acquired Pepsi-Cola General
Bottlers, for which PepsiCo was the franchisor and the principal supplier.
Following that acquisition, Pepsi-Cola General Bottlers acquired additional
Pepsi-Cola franchises from independent bottlers in the United States. In 1987,
Pepsi-Cola General Bottlers acquired two Pepsi-Cola franchises directly from
PepsiCo in a transaction in which PepsiCo acquired a 20% equity interest in
Pepsi-Cola General Bottlers, with Whitman owning 80%. From the date of that
transaction until May 1999, PepsiCo had a representative on the Pepsi-Cola
General Bottlers board of directors.
Between 1988 and 1998, Whitman divested most of its operating companies
through sales and spin-offs, culminating with the spin-offs of Midas, Inc. and
Hussmann International, Inc. in January 1998. Following those transactions,
Pepsi-Cola General Bottlers remained as Whitman's sole significant operating
company.
In 1998, PepsiCo announced its intention to pursue a strategy of
consolidating its franchisee relationships and identifying a small group of
franchisees to serve as anchor bottlers. In 1999, Whitman and PepsiCo
consummated a series of transactions establishing a new business relationship
between them. See "--The Companies--Whitman Corporation." As part of that
relationship, Whitman was designated as a Pepsi Cola anchor bottler and PepsiCo
contributed its 20% equity interest in Pepsi-Cola General Bottlers and certain
bottling operations and assets in the midwestern United States, Poland, Hungary,
the Czech Republic and Slovakia to Whitman for approximately 39% of Whitman's
common stock, assumption of $300 million in debt and certain bottling operations
in Virginia, West Virginia and Russia.
On November 19, 1999, Bruce S. Chelberg, Whitman's Chairman and Chief
Executive Officer, publicly announced his intention to retire at the end of
2000. Following that announcement, a committee of Whitman's board of directors,
its Committee on Directors, began the task of identifying Mr. Chelberg's
successor.
In early February 2000, Mr. Chelberg was contacted by Robert C. Pohlad,
President and Chief Executive Officer of PepsiAmericas, who suggested a meeting
to discuss a possible transaction between the two companies. On February 8,
2000, Messrs. Chelberg and Pohlad met in Whitman's offices and discussed
PepsiAmericas' interest in exploring a transaction in which PepsiAmericas would
be combined with Whitman. At this meeting, the two executives discussed general
issues about a possible transaction, including the strategic and geographic fit
of the two companies, potential synergies and opportunities for margin
improvement, long-term opportunities for growth due to PepsiAmericas' presence
in Puerto
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Rico and Jamaica, PepsiAmericas' desire for a tax-free transaction, Whitman's
search for a successor for Mr. Chelberg, and the possibility of an additional
investment in Whitman by Pohlad Companies. At the conclusion of the meeting,
Messrs. Chelberg and Pohlad agreed to continue discussions. On February 28,
2000, Messrs. Chelberg and Pohlad met again at PepsiAmericas' offices to discuss
the issues in greater detail, including the possibility of Mr. Pohlad succeeding
Mr. Chelberg as Whitman's Chief Executive Officer in connection with the
transaction. They also agreed on certain preliminary steps in assessing a
transaction. On March 1, 2000 Whitman and PepsiAmericas entered into a
confidentiality agreement which contained, among other things, reciprocal
agreements to preserve the confidential nature of non-public information
exchanged by the companies and the agreement of each company not to purchase
stock or otherwise attempt to acquire an interest in the other company without
the consent of the other company for a period of one year.
On or about March 11, 2000, Mr. Chelberg contacted PepsiCo's representatives
on the Whitman board to discuss PepsiCo's position with regard to a potential
transaction between Whitman and PepsiAmericas. PepsiCo's representatives
expressed to Mr. Chelberg that PepsiCo was in favor of such a transaction and
that PepsiCo believed that such a transaction represented an important
opportunity in line with Whitman's growth strategy and would strengthen
Whitman's position as an anchor bottler.
On March 8, 2000, Martin M. Ellen, Whitman's Senior Vice President and Chief
Financial Officer, met with John F. Bierbaum, the Senior Vice President and
Chief Financial Officer of PepsiAmericas, to discuss their respective reviews of
publicly-available financial data and other information. Mr. Ellen expressed his
views regarding valuation and the basis upon which PepsiAmericas shares would be
exchanged for Whitman shares. Mr. Ellen observed that PepsiAmericas' then
current share price reflected an EBITDA multiple of approximately 9.5 times,
substantially greater than Whitman's then current multiple of approximately 6.5
times.
On April 25, 2000, Messrs. Chelberg and Pohlad met again to discuss a
possible transaction. In addition to the valuation issues, Mr. Chelberg
addressed the limitations in Whitman's shareholder agreement with PepsiCo which
restricted PepsiCo's ability to acquire more than 49% of Whitman's outstanding
common stock, and advised Mr. Pohlad of Whitman's concern that the same
limitation should apply to the combined ownership of Whitman common stock by
PepsiCo and the Pohlad Companies if a transaction between Whitman and
PepsiAmericas were to be completed. They also discussed certain management and
tax issues, and their views about the next steps in the negotiations, including
presentations of preliminary information to their respective boards of directors
within the next two weeks.
On April 26, 2000, Mr. Bierbaum made a presentation to the board of
directors of PepsiAmericas at its regularly scheduled meeting regarding the
possibility of a merger with Whitman. Mr. Bierbaum indicated that PepsiCo was
supportive of the transaction and that PepsiAmericas' senior management had met
with Whitman's senior management to discuss general terms of a transaction,
including strategic and geographic fit, potential synergies and valuation.
Following Mr. Bierbaum's presentation, PepsiAmericas' board of directors
authorized management of PepsiAmericas to explore a potential strategic business
relationship with Whitman.
Prior to the regularly scheduled meeting of Whitman's board of directors on
May 4, 2000, Whitman's Committee on Directors met to discuss the search for
Mr. Chelberg's successor as chief executive officer. The committee decided to
temporarily suspend the search for a successor in view of the possible
transaction with PepsiAmericas and the possibility that Mr. Pohlad might become
Whitman's Chief Executive Officer if that transaction were to be consummated. At
the Whitman board meeting later that day, Mr. Chelberg reported to the board on
the discussions concerning the possible transaction with PepsiAmericas, together
with management's preliminary analysis of the strategic significance of that
transaction and publicly available financial data and other information. He also
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reviewed with the board the possible implications of the transaction on
Whitman's search for his successor.
On May 15, 2000, PepsiAmericas, after interviewing three candidates, engaged
Salomon Smith Barney to act as its financial advisor in connection with a
possible transaction with Whitman.
Following their respective board meetings, management of the parties
continued discussions, and met in person at Whitman's headquarters on May 15,
2000. Present on behalf of Whitman were Mr. Chelberg, Mr. Ellen and
Mr. Steven R. Andrews, Senior Vice President, Secretary and General Counsel.
Also present were representatives of Credit Suisse First Boston, Whitman's
financial advisor. Present on behalf of PepsiAmericas were Messrs. Pohlad and
Bierbaum, together with PepsiAmericas' outside counsel and representatives of
Salomon Smith Barney, PepsiAmericas' financial advisor. Also at the meeting was
Richard W. Lawrence, a representative of PepsiCo with extensive experience in
structuring bottler transactions. At this meeting, the parties discussed the
mechanics of exchanging information and continuing their respective due
diligence reviews, as well as a proposed timetable for proceeding. Following the
meeting, the parties submitted written preliminary due diligence requests to one
another.
On April 7, at Mr. Chelberg's request Mr. Pohlad met with Dr. Archie R.
Dykes, chairman of Whitman's Committee on Directors, to initiate the committee's
consideration of Mr. Pohlad as a possible successor to Mr. Chelberg. At that
meeting, Mr. Pohlad and Dr. Dykes agreed that it would be advisable for
Mr. Pohlad to meet with the other members of the committee and with the other
members of Whitman's board of directors. Over the next several weeks,
Mr. Pohlad met individually with each member of Whitman's board of directors.
On May 31 and June 1, 2000, representatives of Whitman and PepsiAmericas,
together with their financial advisors and representatives of PepsiCo met in
Chicago during which time the representatives of Whitman and PepsiAmericas made
formal management presentations, exchanged written briefing materials, and
discussed their respective organizations, territories, operations, historical
financial results and internal financial forecasts for the succeeding three-year
period. Mr. Lawrence was also present. Whitman and PepsiAmericas discussed their
preliminary views as to the appropriate valuation of PepsiAmericas' shares in a
transaction. PepsiAmericas maintained that its shareholders should receive
market price for their shares (which at the time was approximately $3.25 per
share) in connection with the transaction, and Whitman maintained that it could
only justify paying the market price for PepsiAmericas shares if PepsiAmericas
achieved its growth projections. The Whitman representatives expressed a belief
that the market price of PepsiAmericas stock was not an accurate measure of its
value because of the relatively thin trading volume of the stock. Whitman and
PepsiAmericas continued their discussions and their exchange of written
materials following the meeting, but agreed that no on-site due diligence would
be conducted until later in the process. The parties further agreed that Whitman
would prepare a proposal outlining the basis for further discussions with
PepsiAmericas.
Mr. Chelberg advised the Whitman board of directors of the status of the
discussions at a regularly scheduled meeting held on June 16, 2000.
Mr. Chelberg presented management's preliminary analysis of the information
obtained in connection with its initial due diligence review, including the
historical operations of PepsiAmericas, its geographic territories, and
financial summaries for each of the territories. He also discussed a preliminary
valuation of PepsiAmericas, including comparisons of peer group financial data,
and outlined additional work to be performed. Mr. Andrews discussed various
relevant provisions of Delaware law and the possible role of the Affiliated
Transaction Committee of Whitman's board of directors in reviewing the
transaction since PepsiCo was a major shareholder of both Whitman and
PepsiAmericas. Dr. Dykes reported that Mr. Pohlad had met with each member of
the board of directors. Based on the reports of the directors and the work
conducted by the Committee on Directors, Dr. Dykes reported that the committee
was prepared to unanimously recommend to the board that Mr. Pohlad serve as
Whitman's Chief Executive Officer if a transaction with PepsiAmericas
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could be completed on suitable economic terms. In view of the strategic and
long-term growth opportunities presented by the potential transaction, the
Whitman board directed management to proceed with its review of a potential
transaction with PepsiAmericas. The Whitman board also determined that, in light
of PepsiCo's economic interest in PepsiAmericas, the Affiliated Transaction
Committee should review any proposed transaction and make a recommendation to
the board as to its merits.
Whitman's Affiliated Transaction Committee, composed of Dr. Dykes,
Mr. Richard Cline and Governor Pierre DuPont, met on June 26, 2000. The
committee elected Dr. Dykes as chairman and retained Wachtell, Lipton, Rosen &
Katz as outside counsel to the committee. Dr. Dykes reported that PepsiCo's
representatives on the Whitman board had indicated that they believed the
potential transaction represented an important and unique opportunity for
Whitman to advance its stated strategic objectives and play a more significant
role in the Pepsi-Cola system. He also reported that these directors were
concerned with the lack of progress in the negotiations and with the risk that,
absent renewed effort by Whitman's management to find creative solutions to the
differences between the parties, this unique opportunity for both Whitman and
PepsiAmericas would be lost. Dr. Dykes reported that the PepsiCo representatives
had also indicated that PepsiCo was concerned with the pace of progress made in
aligning Whitman's business operations with its recent designation as a Pepsi
Cola anchor bottler. After discussion with management and Credit Suisse First
Boston, the committee concluded that the strategic rationale of the transaction
justified continued discussions in spite of the significant differences between
the parties in their views as to the valuation of PepsiAmericas shares in
connection with a transaction. Accordingly, the committee directed management
and Credit Suisse First Boston to pursue alternative structures for a
transaction, such as an earnout or some other suitable mechanism for resolving
the valuation issue.
Whitman and Credit Suisse First Boston continued their review of the
financial data provided by PepsiAmericas and the parties and their financial
advisors continued their discussions. By early July 2000 Whitman's management
and its financial advisor had formulated a proposal which would permit
PepsiAmericas' public shareholders to elect to receive in exchange for each
PepsiAmericas share either $3.25 in cash or shares of Whitman common stock worth
$3.25, based on the greater of $12.02 per Whitman share (the 30-day average of
the closing prices of Whitman stock for the immediately preceding 30 days) or
the market price of Whitman common stock at the time of the closing of the
proposed transaction. Under this proposal, using the same valuation methods,
Dakota Holdings would receive, in exchange for each PepsiAmericas share held by
it, shares of Whitman common stock worth $1.25, plus the contingent right to
receive shares of Whitman common stock worth an additional $2.00 upon
achievement by PepsiAmericas of financial targets in 2001 and 2002 tied to
performance in PepsiAmericas' Caribbean territories. This proposal was approved
by the Affiliated Transaction Committee at a meeting on July 6, 2000 and sent to
PepsiAmericas shortly thereafter.
On July 12, 2000, PepsiAmericas responded with a counterproposal. Under the
PepsiAmericas counterproposal, the public shareholders of PepsiAmericas would
receive their choice of: (1) cash equal to the average closing price of
PepsiAmericas common stock during the 30 days prior to the announcement of the
transaction (which, based on a July 12, 2000 announcement date, would have been
$3.35), (2) Whitman common stock based on an exchange ratio equal to the
quotient of the average closing price of PepsiAmericas' common stock during the
30 days prior to announcement of the transaction divided by Whitman's average
closing price during the same period (which, based on a July 12, 2000
announcement date, would have been an exchange ratio of 0.2764) or (3) at the
closing, Whitman common stock with an exchange ratio of 70.15% of the exchange
ratio in alternative (2) and a contingent right to receive another $1.50 in
Whitman common stock if certain EBITDA targets in 2000 and 2001 were achieved by
PepsiAmericas. Under the PepsiAmericas counterproposal, all shares held by
Dakota Holdings would be required to elect the third alternative.
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On July 20, 2000, Whitman, PepsiAmericas, and their respective financial and
legal advisors, met to continue their negotiations. Mr. Richard W. Lawrence was
also present. Negotiations centered around the proper scope and term of the
earnout, corporate governance issues and the appropriate valuation methodology.
Whitman proposed a fixed purchase price for all of PepsiAmericas' common stock
and PepsiAmericas suggested a fixed number of shares of Whitman common stock,
using then current market valuations as a means of determining the proportionate
value that each of Whitman and PepsiAmericas would contribute to the
post-combination entity.
On July 24, 2000, Mr. Pohlad contacted Mr. Basil K. Vasiliou, one of
PepsiAmericas' independent directors, to discuss the proposed transaction and
the establishment of a special committee of the PepsiAmericas board of
directors.
Mr. Pohlad, Mr. Bierbaum and PepsiAmericas' outside counsel met with
Mr. Vasiliou and Salomon Smith Barney on July 25, 2000 to discuss the
transaction and the status of Salomon Smith Barney's negotiations with Whitman's
financial advisor.
At PepsiAmericas regularly scheduled board of directors meeting held on
July 26, 2000, Mr. Pohlad reported on the proposed transaction indicating that
the primary motivation of the transaction was to grow the value of
PepsiAmericas' business. Mr. Pohlad stated that there were several open issues
to be addressed, including the cash election price, the exchange ratio, the
earnout mechanism, the due diligence to be conducted, the parameters of any
additional investment in Whitman by Pohlad Companies, and the composition of the
board of directors and management after the closing of the proposed transaction.
The PepsiAmericas board of directors reviewed the status of the negotiations
with Whitman, including the general terms, conditions and valuations that were
being considered by the parties. The PepsiAmericas board of directors determined
that it was appropriate to establish a special committee of disinterested and
independent directors to assist the board of directors in evaluating the
proposed transaction. The special committee was formed on July 26, 2000, with
Mr. Vasiliou and Mr. Diego Suarez, Jr. serving as its members.
The PepsiAmericas board of directors authorized the special committee to
consult with management with respect to the proposed transaction and retain, at
the expense of PepsiAmericas, such advisors as the special committee deemed
necessary to assist it in carrying out its duties and responsibilities. The
special committee engaged the law firm of Willkie Farr & Gallagher as its
counsel on July 27, 2000.
Between July 26 and July 31, 2000, Mr. Vasiliou, chairman of the
PepsiAmericas special committee, actively participated in several discussions
and negotiations involving PepsiAmericas, Whitman and their respective financial
advisors regarding the terms, conditions and valuations relating to a
transaction with Whitman.
On July 28, 2000, Salomon Smith Barney submitted a proposal to Whitman on
behalf of PepsiAmericas. The parties and their financial and legal advisors
continued negotiating over the weekend of July 29 and 30, 2000, exchanging
revised proposals. The open items being discussed centered around the amount of
the cash consideration, the exchange rate to be used, whether the exchange rate
should be fixed or floating and, if floating, what collar, if any, would apply.
The PepsiAmericas special committee and its counsel met on July 31, 2000 to
discuss the status of the transaction. The members of the special committee
determined, based on Whitman's comments to the July 28, 2000 PepsiAmericas
proposal, that the parties still had a number of substantive points to address
before any agreement could be reached. Later in the day on July 31, 2000,
Salomon Smith Barney submitted a new proposal to Whitman.
On August 1, 2000, Whitman's Affiliated Transaction Committee, together with
its outside counsel, met in Chicago to discuss the proposals and the status of
the negotiations. Also present at the request of the committee were
representatives of Credit Suisse First Boston and members of Whitman's
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management, along with Mr. Lawrence, who was present to answer questions the
committee might have as to PepsiCo's positions. The committee held discussions
with Credit Suisse First Boston and management about the different views of
valuation and other points of disagreement, including board representation, pro
forma ownership of Whitman by PepsiCo and the Pohlad Companies and other issues.
The committee expressed its view that it was important that over 50% of Whitman
common stock be held by the public and Mr. Lawrence indicated that PepsiCo would
agree to such a limitation. At the conclusion of the meeting, the committee
authorized management to submit a revised proposal to PepsiAmericas based on the
earnout concept but proposing an exchange rate based on the relative prices of
PepsiAmericas common stock and Whitman common stock during the 15-days prior to
announcement of the transaction subject to a collar so that if the price of the
Whitman common stock fluctuated between the announcement of the transaction and
the closing, Whitman would not pay more than a stated value for the
PepsiAmericas common stock.
The PepsiAmericas special committee and its counsel met on August 2, 2000
with Salomon Smith Barney and PepsiAmericas' counsel to discuss the July 31,
2000 proposal made by Salomon Smith Barney and the comments received from
Whitman regarding that proposal, including various alternative methods for
determining the proposed exchange rate in the transaction. The special committee
expressed concern over limiting PepsiAmericas' shareholders from benefiting by
an increase in the Whitman common stock price after the announcement of the
transaction; however, Salomon Smith Barney communicated its belief to the
special committee that, based on its conversations with Whitman and its
financial advisor, Whitman would only agree to setting the exchange rate based
on its stock price prior to the shareholders' meetings to approve the
transaction.
On August 2, 2000, Mr. Lawrence met with representatives of PepsiAmericas to
discuss Whitman's latest proposal. Later that day, PepsiAmericas submitted a
counterproposal to Whitman. The parties continued their discussions on
August 3, 2000, and Whitman reviewed various open issues and made
counterproposals to PepsiAmericas through Credit Suisse First Boston.
On August 3, 2000, the PepsiAmericas special committee and its counsel met
in the morning and decided to retain its own financial advisor. Throughout that
day, the special committee continued to discuss with senior management of
PepsiAmericas and Salomon Smith Barney possible ways to address its issue
regarding when to value the Whitman common stock. The special committee
considered both fixed and floating exchange rates for the stock and cash
consideration. In the afternoon, the special committee, along with the senior
management of PepsiAmericas, agreed to use the value of the Whitman common stock
at the time of the closing, with a collar so that the shareholders of
PepsiAmericas could share in any appreciation in the Whitman common stock price
after announcement of the transaction to the extent the price was outside of the
collar. PepsiAmericas shareholders would be protected against a reduction in the
price of Whitman common stock as long as the price was within the collar. The
special committee recognized that the value to be received by the PepsiAmericas
shareholders could decrease if the Whitman common stock price decreased to a
level below the collar. Salomon Smith Barney made the proposal to Whitman and
then reported back to the committee on Whitman's comments regarding the
measurement period used to value the Whitman common stock. The special committee
preliminarily determined (subject to input from its financial advisor) that the
proposal, as revised to account for Whitman's comments, was in the best interest
of PepsiAmericas' shareholders.
Following a series of calls between representatives of Credit Suisse First
Boston and Salomon Smith Barney, the parties reached a tentative understanding
on pricing methodologies and valuation of PepsiAmericas on August 3, 2000 and,
on August 4, 2000, the parties agreed on a term sheet substantially similar to
the August 3, 2000 term sheet with the exception that the cash consideration
offered to PepsiAmericas shareholders would float outside of the collar so that
the value of the cash alternative would be the same as the value of the stock
alternative. This term sheet constituted the basis upon which the definitive
agreement and plan of merger was negotiated.
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The August 4, 2000 term sheet was reviewed separately by the special
committee of the PepsiAmericas' board of directors and by Whitman's Affiliated
Transaction Committee on August 7, 2000. On August 7, 2000, Whitman's Affiliated
Transaction Committee met and approved the terms of the August 4, 2000, term
sheet and directed management to complete its due diligence and to negotiate a
definitive merger agreement and appropriate ancillary agreements incorporating
the terms of the August 4, 2000 term sheet to be presented to the full Whitman
board of directors for approval at a regularly scheduled meeting to be held on
August 17 and 18, 2000.
On August 7, 2000, the PepsiAmericas special committee engaged Chase
Securities, Inc. as its financial advisor.
Between August 4 and August 18, 2000, the parties engaged in negotiation of
the merger agreement and the voting agreements and conducted extensive due
diligence, regarding operating, financial and legal matters.
On August 15, 2000, the PepsiAmericas special committee and its counsel met
with its financial advisor, Chase Securities, to discuss Chase Securities'
analysis of the proposed transaction. The special committee inquired of Chase
Securities extensively about its analysis. Chase Securities noted that the
current PepsiAmericas stock price was not meaningful for the analysis because
there was very light trading volume compared to comparable companies and the
recent price was higher than the average price for the previous 60 days.
On August 15, 2000, Lionel L. Nowell III, PepsiCo's representative on the
board of directors of PepsiAmericas, resigned as a director of PepsiAmericas, in
light of Mr. Nowell's decision to resign from PepsiCo.
On August 17, 2000, the PepsiAmericas special committee met again with Chase
Securities. The special committee inquired of Chase Securities about its
analysis of the proposed transaction and discussed each of the cash, stock and
contingent share consideration alternatives that would be available to
shareholders. Chase Securities expressed its opinion that, assuming the cash
consideration would not fall below $3.80 and that, as to the contingent share
consideration, the surviving corporation will meet the adjusted EBITDA targets
as provided in the agreement, the merger consideration was fair, from a
financial point of view, to the public shareholders of PepsiAmericas. Chase
Securities agreed to deliver its written opinion to that effect to the special
committee. See "--Opinion of PepsiAmericas Special Committee's Financial
Advisor." The special committee also discussed the due diligence performed by
its counsel and determined that it was satisfied with the review. After a review
of the terms of the final draft of the merger agreement with its counsel, the
special committee concluded that the proposed transaction and the merger
agreement were in the best interest of the public shareholders of PepsiAmericas
and voted to recommend the transaction and the merger agreement to the board of
directors of PepsiAmericas.
At its meeting held on August 18, 2000, the PepsiAmericas board of directors
reviewed the terms and conditions of the definitive agreements for the proposed
transaction and discussed at length with its financial advisor, Salomon Smith
Barney, the final valuation analysis of the transaction presented by Salomon
Smith Barney to the PepsiAmericas board. PepsiAmericas' outside counsel
addressed the due diligence process in which PepsiAmericas engaged regarding
Whitman and made the directors aware of their fiduciary duties to the
shareholders of PepsiAmericas under Delaware law. Following a presentation by
Mr. Bierbaum regarding the transaction, Mr. Vasiliou discussed in detail the
process followed by the special committee in selecting its advisors and in
recommending the transaction to the board of directors for approval. Salomon
Smith Barney then expressed its opinion that the merger consideration was fair
to the public shareholders of PepsiAmericas from a financial point of view. See
"--Opinion of PepsiAmericas' Financial Advisor." At the conclusion of the
meeting, the PepsiAmericas board of directors, with Mr. Pohlad abstaining,
approved the definitive agreements for the transaction.
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At its meetings held on August 17 and August 18, 2000, the Whitman board of
directors reviewed the terms and conditions of the definitive agreements for the
proposed transaction with PepsiAmericas and discussed at length with its
financial advisor, Credit Suisse First Boston, the final analysis of the
transaction presented by Credit Suisse First Boston to the Whitman board. Credit
Suisse First Boston expressed its opinion that as of that date and based upon
and subject to the assumptions made, procedures followed, matters considered and
qualifications and limitations of the scope of review reviewed with the Whitman
board the consideration to be paid by Whitman, in the aggregate, pursuant to the
cash alternative, the stock alternative and the contingent payment alternative
was fair to Whitman from a financial point of view. Counsel to Whitman and
counsel to the Whitman Affiliated Transaction Committee reviewed with the
Whitman board of directors the terms of the definitive agreements and the
fiduciary duties of the members of the Whitman board to Whitman's shareholders
under Delaware law. Mr. Ellen discussed with the board certain financial aspects
of the proposed transaction. Dr. Dykes reported on the proceedings of the
Affiliated Transaction Committee and delivered its recommendation to the full
board that the transaction be approved. Messrs. Karl M. von der Heyden, the Vice
Chairman of PepsiCo, and Robert F. Sharpe, Jr., the Senior Vice President,
Public Affairs and General Counsel of PepsiCo, each a member of the board of
directors of Whitman, excused themselves from the meeting during Dr. Dykes'
report. The Whitman board of directors, with Messrs. Von der Heyden and Sharpe
abstaining, approved the definitive agreements for the transaction.
Later that day, the parties signed the merger agreement and the voting
agreements and the transaction was publicly announced before the market opened
on August 21, 2000.
RECOMMENDATION OF THE WHITMAN BOARD AND WHITMAN'S REASONS FOR THE MERGER
The Whitman board of directors believes that the merger will benefit Whitman
by enhancing its territorial presence as well as its position as a consolidating
anchor bottler in the PepsiCo system. Specifically, the board believes that
there exist potential synergies and opportunities for margin improvements in the
domestic territories, as well as long-term opportunities for growth provided by
PepsiAmericas' operations in the Caribbean territories of Puerto Rico and
Jamaica and potential acquisitions of other territories, both domestically and
internationally.
In approving and recommending the transactions, the Whitman board of
directors considered and evaluated the following material factors:
- that Whitman's role as an anchor bottler in the PepsiCo system provides
strategic growth opportunities through consolidation of PepsiCo's
franchisee relationships;
- that the acquisition of PepsiAmericas fits within the anchor bottler
growth strategy in terms of PepsiAmericas' geographic proximity to
Whitman's current operations, the potential for margin improvements in
domestic territories, the potential for operating and margin improvements
in the Caribbean territories of Puerto Rico and Jamaica, and the potential
for additional acquisition opportunities both domestically and
internationally;
- that certain operating synergies could be achieved in connection with the
integration of the two companies;
- that Mr. Chelberg had previously announced his intention to retire as
Chairman and Chief Executive Officer of Whitman, that Robert C. Pohlad
would succeed Mr. Chelberg as Chief Executive Officer and that Dr. Dykes
would succeed Mr. Chelberg as non-executive chairman of Whitman;
- the protections afforded to Whitman's public shareholders by the
shareholder agreements with each of PepsiCo and Pohlad Companies;
- the intended federal income tax consequences of the transactions;
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- the terms and conditions of the merger agreement, including the contingent
payment alternative which will subject a portion of the merger
consideration to the achievement of certain financial objectives, the
parties' representations, warranties and covenants, and the conditions to
their respective obligations;
- the written opinion of Credit Suisse First Boston dated August 18, 2000,
that, as of that date and based upon and subject to the assumptions made,
procedures followed, matters considered and qualifications and limitations
of the scope of review set forth in the opinion, the consideration to be
paid by Whitman, in the aggregate, pursuant to the cash alternative, the
stock alternative and the contingent payment alternative is fair to
Whitman from a financial point of view; and
- the results of the due diligence review of the PepsiAmericas' operations
conducted by Whitman management and Whitman's financial advisors.
The Whitman board also considered the views of PepsiCo's management as to
the strategic advantages of the transaction and the fact that PepsiCo's
representatives on Whitman's board of directors, while abstaining from voting on
the transaction, had also individually supported the strategic purposes of the
transaction, provided that issues of financial fairness could be resolved.
In analyzing the transaction, the Whitman board of directors evaluated the
factors and considerations described above and consulted with its financial and
legal advisors and with Whitman's management. The Whitman board of directors did
not adopt the Credit Suisse First Boston opinion as the exclusive basis for its
determination as to the advisability of the transaction; rather, the Whitman
board of directors, as indicated above, included the Credit Suisse First Boston
opinion as well as all of the other information regarding the transaction that
was made available to, and evaluated by, it. The Whitman board of directors
concluded that the combination of the factors discussed above, together with the
independent evaluation of each of its members, supported the determination of
the Whitman board that the transaction was advisable and in the best interests
of Whitman and its shareholders. In reaching this conclusion, the Whitman board
of directors did not assign relative or specific weights to the above
information and factors or determine that any information or factor was of
particular importance, other than its significant reliance on the Credit Suisse
First Boston opinion as to the financial fairness of the transaction. A
determination of various weightings would, in the view of the Whitman board of
directors, be impractical. Rather, the Whitman board of directors viewed its
position and recommendations as being based upon the totality of the information
and factors presented to and considered by it. In addition, individual members
of the Whitman board of directors may have given different weight to different
information and factors.
RECOMMENDATION OF THE PEPSIAMERICAS BOARD AND PEPSIAMERICAS' REASONS FOR THE
MERGER
The PepsiAmericas board of directors believes that the proposed transaction
is consistent with the business plan of PepsiAmericas to capitalize on its
status as an anchor bottler by expanding in non-domestic markets and exploring
ways to achieve efficiencies, economies of scale and increased buying power. The
board of directors of PepsiAmericas believes that the public shareholders of
PepsiAmericas will benefit from the greater size and strength of the combined
entity resulting from the transaction, as well as increased liquidity in its
stock, reduced leverage ratios and improved operating margins. The PepsiAmericas
board of directors also believes there are potential synergistic cost savings
that can be realized as a result of the proposed transaction, including
administrative cost savings and purchasing savings as a result of increased
buying power. The PepsiAmericas board of directors also believes the combined
entity will benefit from the leadership of Robert C. Pohlad as Chief Executive
Officer.
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In approving and recommending the merger with Whitman, the PepsiAmericas
board of directors considered and evaluated several material factors including,
without limitation:
- Whitman's asset base, production and distribution territories are
complementary to PepsiAmericas.
- Following the transaction, the combined entity would have exclusive
production and distribution rights for Pepsi-Cola brand products in
portions of 20 states and territories and five foreign countries
worldwide. This would significantly expand PepsiAmericas' geographic
presence in both the United States and overseas and would diversify
PepsiAmericas' international operations to include areas beyond the
Caribbean.
- On a pro forma basis, the combined entity would have more than five times
the revenues of PepsiAmericas currently.
- On a pro forma basis, the combined entity's leverage ratios would be
approximately 3.0 times EBITDA and approximately 1.0 times book equity, as
compared to PepsiAmericas current leverage ratios of approximately 5.6
times EBITDA and approximately 2.7 times book equity, respectively.
- The combined entity would have more leverage in negotiating with large
retail customers that cover large geographic territories.
- The combined entity would likely have improved equity research coverage
and institutional interest.
- The average daily trading volume in Whitman stock during the last
12 months was nearly 7.6 times the average daily trading volume of
PepsiAmericas stock during the same period.
- The proposed transaction would strengthen the status of the combined
entity as an anchor bottler.
- The combined entity would have greater financial and strategic ability to
acquire PepsiCo bottling franchises that become available in areas
adjacent to its territories.
- The evaluation of other strategic alternatives, such as the status quo,
growth through acquisitions of additional franchises or diversification,
growth through other strategic acquisitions or joint ventures and a sale
of the entire company. The board of directors evaluated the costs,
benefits and risks associated with each of these alternatives.
- The intended federal income tax consequences of the transactions,
including the ability of PepsiAmericas' shareholders to have a tax-free
exchange of PepsiAmericas common stock for Whitman common stock. See
"--United States Federal Income Tax Consequences of the Merger."
- The terms and conditions of the merger agreement, including the
consideration for the transaction, the parties' representations,
warranties and covenants, the conditions to their respective obligations,
and the belief of the PepsiAmericas board of directors that the terms and
conditions were appropriate for the proposed transaction.
- The recommendation of the transaction by PepsiAmericas' management.
- The recommendation of the transaction by the PepsiAmericas' special
committee of the board of directors.
- The opinion of Salomon Smith Barney, dated August 18, 2000, that, as of
that date and based upon and subject to the matters described in the
opinion, the merger consideration to be
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received by the public shareholders of PepsiAmericas was fair, from a
financial point of view, to such shareholders.
- The opinion of Chase Securities, Inc., dated August 18, 2000, that, as of
that date and based upon and subject to the matters described in the
opinion, that the merger consideration each as elected and to be received
by the public shareholders of PepsiAmericas was fair, from a financial
point of view, to such shareholders.
- The results of the due diligence review of Whitman conducted by
PepsiAmericas' management and PepsiAmericas' financial and legal advisors.
In analyzing the transaction, the PepsiAmericas board of directors consulted
with its financial and legal advisors and the senior management of PepsiAmericas
and considered the recommendation of its special committee. The PepsiAmericas
board of directors did not adopt the opinions of Salomon Smith Barney and Chase
Securities as the exclusive basis for its determination as to the advisability
of the transaction; rather, the PepsiAmericas board of directors considered such
opinions in the total mix of information regarding the transaction that was
available to, and evaluated by, it. The PepsiAmericas board of directors
concluded that the combination of the factors discussed above, together with an
independent evaluation by the PepsiAmericas board of directors, supported a
determination by the PepsiAmericas board of directors that the transaction was
advisable and in the best interests of PepsiAmericas and its public
shareholders. In reaching this conclusion, the PepsiAmericas board of directors
did not assign relative or specific weights to the above information and factors
or determine that any information or factor was of particular importance. A
determination of various weightings would, in the view of the PepsiAmericas
board of directors, be impractical. Rather, the PepsiAmericas board of directors
viewed its position and recommendation as being based on the totality of the
information and factors presented to and considered by it. In addition,
individual members of the PepsiAmericas board of directors may have given
different weight to different information and factors.
At a meeting held on August 18, 2000, the PepsiAmericas board of directors,
with Robert C. Pohlad abstaining, unanimously (a) approved the proposed
transaction with Whitman, (b) determined that the Whitman transaction was
advisable and in the best interests of PepsiAmericas and its public shareholders
and (c) recommended that the PepsiAmericas shareholders vote for adoption of the
merger agreement.
The merger agreement does not contain a requirement that either Salomon
Smith Barney or Chase Securities update its opinion as of a date subsequent to
the date of the opinion.
OPINION OF WHITMAN'S FINANCIAL ADVISOR
On June 9, 2000, Whitman engaged Credit Suisse First Boston to act as
Whitman's exclusive financial advisor in connection with the merger. Whitman
selected Credit Suisse First Boston based on Credit Suisse First Boston's
experience, expertise and reputation and its familiarity with Whitman's
business. Credit Suisse First Boston is an internationally recognized investment
banking firm and is regularly engaged in the valuation of businesses and
securities in connection with mergers and acquisitions, leveraged buyouts,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for corporate
and other purposes.
On August 18, 2000, at a meeting of the Whitman board of directors, Credit
Suisse First Boston rendered to the Whitman board of directors its oral opinion,
subsequently confirmed by delivery of a written opinion dated as of August 18,
2000, to the effect that, as of the date of the opinion and based upon and
subject to the assumptions made, procedures followed, matters considered and
qualifications and limitations of the scope of review, the consideration to be
paid by Whitman, in the aggregate, pursuant to the cash alternative, the stock
alternative and the contingent payment alternative was fair to Whitman from a
financial point of view.
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THE FULL TEXT OF CREDIT SUISSE FIRST BOSTON'S OPINION, DATED AS OF
AUGUST 18, 2000, TO THE WHITMAN BOARD OF DIRECTORS, WHICH SETS FORTH ASSUMPTIONS
MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED AND QUALIFICATIONS AND LIMITATIONS
OF THE SCOPE OF REVIEW UNDERTAKEN, IS ATTACHED AS ANNEX B AND IS INCORPORATED
INTO THIS DOCUMENT BY REFERENCE. HOLDERS OF WHITMAN SHARES ARE URGED TO, AND
SHOULD, READ THIS OPINION CAREFULLY AND IN ITS ENTIRETY. CREDIT SUISSE FIRST
BOSTON'S OPINION IS ADDRESSED TO THE WHITMAN BOARD OF DIRECTORS AND RELATES ONLY
TO THE FAIRNESS OF THE CONSIDERATION TO BE PAID BY WHITMAN, IN THE AGGREGATE,
PURSUANT TO THE CASH ALTERNATIVE, THE STOCK ALTERNATIVE AND THE CONTINGENT
PAYMENT ALTERNATIVE TO WHITMAN FROM A FINANCIAL POINT OF VIEW, DOES NOT ADDRESS
ANY OTHER ASPECT OF THE MERGER OR ANY RELATED TRANSACTION, AND DOES NOT
CONSTITUTE A RECOMMENDATION TO ANY SHAREHOLDER AS TO ANY MATTER RELATING TO THE
MERGER. THE SUMMARY OF CREDIT SUISSE FIRST BOSTON'S OPINION IN THIS DOCUMENT IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE OPINION.
In connection with its opinion, Credit Suisse First Boston, among other
things:
- reviewed certain publicly available business and financial information
relating to Whitman and PepsiAmericas, as well as a draft of the merger
agreement, the Whitman stockholder voting agreement, the PepsiAmericas
stockholder voting agreement, a form of the amended and restated
shareholder agreement by and between Whitman and PepsiCo, each dated
August 17, 2000, and a form of the Pohlad shareholder agreement;
- reviewed other information relating to Whitman and PepsiAmericas,
including financial forecasts, which Whitman and PepsiAmericas provided to
or discussed with Credit Suisse First Boston;
- met with the managements of Whitman and PepsiAmericas to discuss the
businesses and prospects of Whitman and PepsiAmericas;
- considered certain financial and stock market data of PepsiAmericas and
compared that data with similar data for other publicly held companies in
businesses similar to those of PepsiAmericas;
- considered, to the extent publicly available, the financial terms of
certain other business combinations and other transactions which have
recently been effected; and
- considered other information, financial studies, analyses and
investigations and financial, economic and market criteria that it deemed
relevant.
Credit Suisse First Boston relied upon the views of the managements of
Whitman and PepsiAmericas concerning the business, operational and strategic
benefits and implications of the merger, including the synergistic values and
operating cost savings expected to be achieved through the combination of the
operations of Whitman and PepsiAmericas. In connection with its review, Credit
Suisse First Boston did not assume any responsibility for independent
verification of any of the information that was provided to or otherwise
reviewed by it and relied on that information being complete and accurate in all
material respects. With respect to financial forecasts, Credit Suisse First
Boston assumed that the forecasts were reasonably prepared on bases reflecting
the best currently available estimates and judgments of the managements of
Whitman and PepsiAmericas as to the future financial performance of Whitman and
PepsiAmericas and as to the cost savings and other potential synergies,
including the amount, timing and achievability of those synergies, benefits and
cost savings, anticipated to result from the merger. Credit Suisse First Boston
was informed and assumed that the merger will be treated as a tax-free
reorganization for United States federal income tax purposes. Credit Suisse
First Boston also assumed that the merger agreement would conform in all
material respects to the draft reviewed by it.
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Credit Suisse First Boston was not requested to make, and did not make, an
independent evaluation or appraisal of the assets or liabilities, contingent or
otherwise, of Whitman or PepsiAmericas, and was not furnished with any
evaluations or appraisals. Credit Suisse First Boston's opinion was necessarily
based on financial, economic, market and other conditions as they existed and
could be evaluated by, Credit Suisse First Boston on the date of its opinion.
Credit Suisse First Boston did not express any opinion as to the relative values
of the consideration to be paid pursuant to the cash alternative, the stock
alternative or the contingent payment alternative, the actual value of Whitman
common shares when issued to PepsiAmericas shareholders pursuant to the merger
(whether pursuant to the stock alternative or the contingent payment
alternative) or the prices at which Whitman shares will trade subsequent to the
merger or the exercise of the option to purchase shares of Whitman common stock,
or Whitman's underlying business decision to effect the merger.
In preparing its opinion to the Whitman board of directors, Credit Suisse
First Boston performed a variety of financial and comparative analyses, which
representatives of Credit Suisse First Boston reviewed with the Whitman board at
the meeting on August 18. The preparation of a fairness opinion is a complex
analytical process involving various determinations as to the most appropriate
and relevant methods of financial analyses and the application of those methods
to the particular circumstances, and, therefore, a fairness opinion is not
readily susceptible to partial analysis or summary description. In arriving at
its opinion, Credit Suisse First Boston made qualitative judgments as to the
significance and relevance of each analysis and factor that it considered.
Accordingly, Credit Suisse First Boston believes that its analyses must be
considered as a whole and that selecting portions of its analyses and factors,
without considering all analyses and factors, could create a misleading or
incomplete view of the processes underlying its analyses and opinion.
In its analyses, Credit Suisse First Boston considered industry performance,
regulatory, general business, economic, market and financial conditions and
other matters, many of which are beyond the control of Whitman and
PepsiAmericas. No company, transaction or business used in Credit Suisse First
Boston's analyses as a comparison is identical to Whitman, PepsiAmericas or the
merger, and an evaluation of the results of those analyses is not entirely
mathematical. Rather, the analyses involve complex considerations and judgments
concerning financial and operating characteristics and other factors that could
affect the acquisition, public trading or other values of the companies,
business segments or transactions being analyzed. The estimates contained in
Credit Suisse First Boston's analyses and the ranges of valuations resulting
from any particular analysis are not necessarily indicative of actual values or
predictive of future results or values, which may be significantly more or less
favorable than those suggested by the analyses. In addition, analyses relating
to the value of businesses or securities do not purport to be appraisals or to
reflect the prices at which businesses or securities actually may be sold.
Accordingly, Credit Suisse First Boston's analyses and estimates are inherently
subject to substantial uncertainty.
Credit Suisse First Boston's opinion and financial analyses were only one of
many factors considered by the Whitman board of directors in its evaluation of
the merger and should not be viewed as determinative of the views of the Whitman
board of directors or management with respect to the merger.
The following is a summary of the financial analyses performed by Credit
Suisse First Boston in connection with the preparation of its opinion and
reviewed with the Whitman board of directors at the meeting on August 18, 2000.
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COMPARABLE COMPANY ANALYSIS
Credit Suisse First Boston compared certain financial, operating and stock
market data of PepsiAmericas to corresponding data of the following publicly
traded carbonated beverage bottling companies:
- Coca-Cola Enterprises,
- Pepsi Bottling Group, and
- Whitman.
Credit Suisse First Boston reviewed enterprise value as a multiple of fiscal
year 1999 and estimated fiscal year 2000 and 2001 earnings before interest,
taxes, depreciation and amortization, commonly referred to as EBITDA, and equity
value as a multiple of estimated fiscal year 2000 and 2001 net income. Further,
Credit Suisse First Boston compared estimated EBITDA divided by sales margin for
the comparable companies' fiscal year 1999 and estimated fiscal year 2000.
Credit Suisse First Boston also considered fiscal year 1999 return on invested
capital and current stock prices as a percentage of 52-week high stock prices of
the comparable companies. All analyses were based on closing stock prices on
August 16, 2000. Credit Suisse First Boston used publicly available information
concerning the historical and estimated financial data for the comparable
companies, Credit Suisse First Boston used estimated financial data for
PepsiAmericas based on PepsiAmericas' management financial forecasts and
estimated financial data for Whitman based on Whitman's management financial
forecasts. Credit Suisse First Boston applied a range of EBITDA multiples for
the comparable companies to corresponding financial data of PepsiAmericas. This
analysis indicated an implied equity value reference range per share of
PepsiAmericas common stock of approximately $1.86 to $4.86 per share.
COMPARABLE TRANSACTION ANALYSIS
Using publicly available information, Credit Suisse First Boston analyzed
the implied revenue and EBITDA transaction multiples paid in selected merger and
acquisition transactions in the carbonated beverage bottling industry:
<TABLE>
<CAPTION>
ACQUIROR TARGET
-------- ------
<S> <C>
- Coca-Cola Enterprises. Inc. Coca-Cola, Dr. Pepper of Albuquerque
- Coca-Cola Enterprises Inc. Six Independent Bottlers
- Management Triarc Companies, Inc.
- Coca-Cola Enterprises Inc. Coca-Cola Southwest
- Coca-Cola Enterprises Inc. North-Central Italian Bottling
- Coca-Cola Enterprises Inc. Coca-Cola Bottling (Luxembourg)
- Coca-Cola Enterprises Inc. Coca-Cola Bottling of New York
- Coca-Cola Enterprises Inc. Coca-Cola Beverages (Canada)
- Coca-Cola Enterprises Inc. The Coca-Cola Company (France and Belgium)
- Coca-Cola Enterprises Inc. Coca-Cola Cadbury Schweppes
- Coca-Cola Enterprises Inc. Coca-Cola Bottling Company of the West
- Coca-Cola Amatil Coca-Cola Getranke
- Coca-Cola Enterprises Inc. Ouachita Coca-Cola Bottling Company, Inc.
</TABLE>
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Credit Suisse First Boston compared enterprise values in the comparable
transactions as multiples of latest 12 months revenue and EBITDA. All multiples
were based on financial information available at the time the relevant
transactions were announced. Credit Suisse First Boston applied a range of
selected multiples for the selected transactions to corresponding financial data
of PepsiAmericas. This analysis indicated an implied equity value reference
range per share of PepsiAmericas common stock of approximately $2.61 to $6.36
per share.
DISCOUNTED CASH FLOW ANALYSIS
Credit Suisse First Boston estimated the present value of the stand-alone,
unlevered, after-tax free cash flows that PepsiAmericas could produce on a
stand-alone basis over the fiscal years 2000 through 2009 based on its
extrapolation of PepsiAmericas' management projections which detailed financial
forecasts for the fiscal years 2000 through 2003. Credit Suisse First Boston
estimated a range of terminal values for PepsiAmericas calculated based on
terminal multiples of estimated fiscal year 2009 EBITDA of 8.0x to 9.0x. This
terminal multiple range was chosen based on a review of the public trading
multiples of selected companies in the carbonated beverage bottling industry and
acquisition multiple precedents in the carbonated beverage bottling industry.
The free cash flows, along with the terminal values, were then discounted to
present value using a discount range of 10% to 11%, based on PepsiAmericas'
estimated weighted average cost of capital. This estimate of PepsiAmericas'
weighted average cost of capital was selected based on a review of the weighted
average cost of capital of selected publicly traded companies in the carbonated
beverage bottling industry and employed the Capital Asset Pricing Model. This
analysis indicated an implied equity value reference range for per share of
PepsiAmericas common stock of approximately $4.02 to $5.31 per share.
SENSITIVITY ANALYSIS
As part of the discounted cash flow analysis, Credit Suisse First Boston
also performed a sensitivity analysis by varying sales growth rates and EBITDA
margin for the fiscal years 2000 through 2009. This analysis indicated an
implied equity value reference range for per share of PepsiAmericas common stock
of approximately $3.18 to $4.34 per share. Additionally, Credit Suisse First
Boston also estimated (using a discount range of 10% to 11%) and considered the
present value of the after-tax free cash flows resulting from synergistic and
strategic benefits, operating cost savings, tax net operating loss utilization
benefits and associated restructuring costs estimated by Whitman management upon
consummation of the merger resulting in an implied equity value of such
benefits, savings and costs of approximately $0.88 to $0.99 per share of
PepsiAmericas.
MERGER CONSEQUENCES ANALYSIS
Credit Suisse First Boston analyzed the potential pro forma effect of the
merger on Whitman management's estimated earnings per share and cash earnings
per share for Whitman in fiscal years 2001 and 2002. Credit Suisse First
Boston's analysis was based on financial forecasts for Whitman provided to it by
Whitman management and on financial forecasts for PepsiAmericas provided to it
by PepsiAmericas management. Further, the merger consequences analysis assumes
that public shareholders of PepsiAmericas (excluding Dakota Holdings) would
elect the cash alternative and that the maximum amount of consideration payable
pursuant to the contingent payment alternative is earned by Dakota Holdings.
Credit Suisse First Boston's analysis also assumed that Whitman's 15-day average
closing stock price for the 15-day period immediately prior to the first public
announcement of the merger was $15.00 per share, amortization of goodwill over
40 years and interest on new borrowings at 8.0%. This analysis indicated that,
after giving effect to an estimated $15 million pre-tax value related to
synergistic and strategic benefits, operating cost savings and tax net operating
loss utilization benefits in 2001 and 2002, the proposed merger would be
(a) dilutive to Whitman management's estimate of Whitman earnings per share and
cash earnings per share in 2001 and (b) accretive to Whitman management's
estimate of Whitman earnings per share and cash earnings per
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share in 2002. The actual results achieved by the combined company may vary from
the projected results and such variations may be material.
PRO FORMA OWNERSHIP ANALYSIS
Credit Suisse First Boston reviewed the pro forma ownership of Whitman
following the merger assuming that Pohlad Companies purchases (a) no additional
Whitman shares from Whitman or PepsiCo, (b) $25 million of additional Whitman
shares at $15.00 per share from Whitman and no additional Whitman shares from
PepsiCo., and (c) $25 million of additional Whitman shares at $15.00 per share
from Whitman and $25 million of additional Whitman shares at $15.00 per share
from PepsiCo. For purposes of this analysis, Credit Suisse First Boston assumed
that public shareholders of PepsiAmericas (excluding Dakota Holdings) would
elect the cash alternative and that the maximum amount of consideration payable
pursuant to the contingent payment election is earned by Dakota Holdings. This
analysis indicated that in all scenarios, the percentage ownership held by
public shareholders (excluding Pohlad Companies and PepsiCo) would exceed 50% of
Whitman's fully-diluted shares and that PepsiCo would own less than 40% of
Whitman's fully-diluted shares. The actual pro forma ownership of the combined
company may vary from these scenarios depending on the consideration election of
PepsiAmericas shareholders and the purchase of additional Whitman shares by
PepsiAmericas shareholders who elect to participate in the contingent payment
alternative.
Whitman has agreed to pay Credit Suisse First Boston for its financial
advisory services a fee of approximately $4.5 million. Whitman has also agreed
to reimburse Credit Suisse First Boston for its out-of-pocket expenses,
including fees and expenses of legal counsel and any other advisor retained by
Credit Suisse First Boston, and to indemnify Credit Suisse First Boston and
related parties against liabilities, including liabilities under the federal
securities laws, arising out of its engagement. Credit Suisse First Boston and
its affiliates have in the past provided financial services to Whitman unrelated
to the merger, for which services Credit Suisse First Boston and its affiliates
have received customary compensation. In the ordinary course of business, Credit
Suisse First Boston and its affiliates may actively trade the debt and equity
securities of both Whitman and PepsiAmericas for their and their affiliates
accounts and for the accounts of customers and, accordingly, may at any time
hold long or short positions in such securities.
OPINION OF PEPSIAMERICAS' FINANCIAL ADVISOR
At the meeting of the PepsiAmericas board of directors held on August 18,
2000, Salomon Smith Barney delivered its oral opinion, subsequently confirmed in
writing, that, as of that date, the merger consideration to be received by the
holders of PepsiAmericas common stock (other than Dakota Holdings), is fair,
from a financial point of view, to such shareholders.
THE FULL TEXT OF THE WRITTEN OPINION OF SALOMON SMITH BARNEY, DATED
AUGUST 18, 2000, WHICH IDENTIFIES ASSUMPTIONS MADE, MATTERS CONSIDERED AND
LIMITATIONS ON THE REVIEW UNDERTAKEN IN CONNECTION WITH THE OPINION, IS ATTACHED
AS ANNEX C TO THIS JOINT PROXY STATEMENT/PROSPECTUS. SHAREHOLDERS OF
PEPSIAMERICAS ARE URGED TO, AND SHOULD, READ THIS OPINION IN ITS ENTIRETY.
SALOMON SMITH BARNEY'S OPINION DOES NOT CONSTITUTE A RECOMMENDATION TO
SHAREHOLDERS OF PEPSIAMERICAS TO VOTE IN FAVOR OF THE MERGER OR A RECOMMENDATION
AS TO THE CHOICE OF CONSIDERATION ANY SHAREHOLDER OF PEPSIAMERICAS SHOULD MAKE
UNDER THE TERMS OF THE MERGER AGREEMENT. SALOMON SMITH BARNEY'S OPINION ALSO
DOES NOT ADDRESS THE RELATIVE VALUES OF EACH OF THE CHOICES OF CONSIDERATION
AVAILABLE UNDER THE TERMS OF THE MERGER AGREEMENT. SHAREHOLDERS OF PEPSIAMERICAS
SHOULD NOT RELY UPON THE OPINION AS A RECOMMENDATION.
In arriving at its opinion, Salomon Smith Barney reviewed a draft of the
merger agreement and related documents dated August 14, 2000 and held
discussions with certain senior officers, directors and
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other representatives and advisors of PepsiAmericas and Whitman concerning the
businesses, operations and prospects of PepsiAmericas and Whitman. Salomon Smith
Barney also examined:
- certain publicly available business and financial information relating to
PepsiAmericas and Whitman; and
- certain financial forecasts and other information and data for
PepsiAmericas and Whitman which were provided to or otherwise discussed
with Salomon Smith Barney by the managements of PepsiAmericas and Whitman,
as the case may be, including information relating to certain strategic
implications and operational benefits anticipated to result from the
merger.
Salomon Smith Barney reviewed the financial terms of the merger as set forth
in the draft merger agreement in relation to, among other things:
- current and historical market prices and trading volumes of PepsiAmericas
Class B common stock and Whitman common stock;
- the historical and projected earnings and other operating data of
PepsiAmericas and Whitman; and
- the capitalization and financial condition of PepsiAmericas and Whitman.
Salomon Smith Barney considered, to the extent publicly available, the
financial terms of certain other similar transactions recently effected which it
considered relevant in evaluating the merger and analyzed certain financial,
stock market and other publicly available information relating to the businesses
of other companies whose operations Salomon Smith Barney considered relevant in
evaluating those of PepsiAmericas and Whitman. Salomon Smith Barney also
evaluated the pro forma financial impact of the merger on Whitman. In addition
to the foregoing, Salomon Smith Barney conducted such other analyses and
examinations and considered such other information and financial, economic and
market criteria as it deemed appropriate in arriving at its opinion.
In rendering its opinion, Salomon Smith Barney assumed and relied, without
independent verification, upon the accuracy and completeness of all financial
and other information and data publicly available or furnished to or otherwise
reviewed by or discussed with it. With respect to financial forecasts and other
information and data provided to or otherwise reviewed by or discussed with it,
Salomon Smith Barney has been advised by the management of PepsiAmericas and
Whitman, as the case may be, that such forecasts and other information and data
were reasonably prepared on bases reflecting the best currently available
estimates and judgments of the management of PepsiAmericas and Whitman, as the
case may be, as to the future financial performance of PepsiAmericas and
Whitman, as the case may be, and the strategic implications and operational
benefits anticipated from the proposed merger. Salomon Smith Barney has not made
or been provided with an independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of PepsiAmericas or Whitman nor has it
made any physical inspection of the properties or assets of PepsiAmericas or
Whitman. For purposes of determining the amount of the contingent payment
alternative, Salomon Smith Barney also assumed that the maximum amount of the
first two of the three contingent payments will be paid to shareholders electing
to receive the contingent payment alternative. In rendering its opinion, Salomon
Smith Barney also took into account the fact that shareholders electing to
receive the contingent payment alternative also have the option to purchase
shares of Whitman common stock. Salomon Smith Barney was advised by
PepsiAmericas, and has assumed, that the final terms of the merger agreement and
related documents do not vary materially from those set forth in the drafts it
reviewed.
Salomon Smith Barney further assumed that the proposed merger will be
consummated in a timely manner and in accordance with the terms of the merger
agreement, without waiver of any of the conditions precedent to the proposed
merger contained in the merger agreement. Salomon Smith
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Barney was advised, and assumed, that the proposed merger will qualify as a
tax-free reorganization under the provisions of Section 368 of the Internal
Revenue Code.
Salomon Smith Barney was not requested to consider, and its opinion does not
address, the relative merits of the proposed merger as compared to any
alternative business strategies that might exist for PepsiAmericas or the effect
of any other transaction in which PepsiAmericas might engage. Salomon Smith
Barney's opinion is necessarily based upon information available to it, and
financial, stock market and other conditions and circumstances existing and
disclosed to it, as of the date of its opinion. Salomon Smith Barney assumes no
responsibility to update or review its opinion based on circumstances or events
occurring after the date of its opinion.
Salomon Smith Barney's opinion is, in any event, limited to the fairness,
from a financial point of view, to holders of PepsiAmericas common stock (other
than Dakota Holdings) pursuant to the merger agreement and does not address
PepsiAmericas' underlying business decision to effect the proposed merger.
Furthermore, Salomon Smith Barney's opinion does not constitute an opinion or
imply any conclusion as to the likely trading range for Whitman common stock
following consummation of the proposed merger.
In connection with its opinion, Salomon Smith Barney performed certain
financial analyses, which it discussed with the PepsiAmericas board of directors
on August 18, 2000. The material portions of the analyses performed by Salomon
Smith Barney in connection with the rendering of its opinion dated August 18,
2000, are summarized below.
Salomon Smith Barney arrived at a range of values for PepsiAmericas by
utilizing the following principal valuation methodologies:
PUBLIC COMPARABLE VALUATION. A public comparable valuation reviews a
company's operating performance and outlook relative to a group of
publicly-traded peer companies to determine an implied unaffected market trading
valuation range. However, no company used in the public comparable valuation
described below is identical to PepsiAmericas or Whitman. Using publicly
available information, Salomon Smith Barney analyzed the market values and
trading multiples of Coca-Cola Enterprises, Inc. and The Pepsi Bottling
Group, Inc.
Salomon Smith Barney compared, among other things, firm values, calculated
as equity value, plus total debt, minority interests, preferred stock less
equity interests and cash, as multiples of the last twelve months and calendar
years 2000 and 2001 (a) revenues, (b) earnings before interest, taxes,
depreciation and amortization, which is referred to as EBITDA and (c) earnings
before interest and taxes, which is referred to as EBIT. All multiples (except
PepsiAmericas, which was based on a price of $3.80 per share) were based on
closing stock prices on August 17, 2000. Estimated financial data for the
selected comparable companies were based on publicly available research
analysts' estimates. Estimated financial data for PepsiAmericas and Whitman were
based on internal estimates of their respective management teams.
Applying a range of these multiples to corresponding financial data of
PepsiAmericas and Whitman resulted in an implied equity reference value range of
approximately $2.48 to $3.34 per share for PepsiAmericas' common stock and
approximately $15.33 to $18.97 per share for Whitman's common stock.
PRECEDENT TRANSACTION VALUATION. A precedent transaction valuation provides
a valuation range based upon financial information of companies that have been
acquired in transactions that have been publicly announced and that are in the
same or similar industries as the business being valued. However, no transaction
used in the precedent transaction valuation described below is identical to the
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merger. Using publicly available information, Salomon Smith Barney reviewed the
purchase price and implied transaction value multiples paid or proposed to be
paid in the following selected transactions:
- Dr. Pepper Bottling Company of Texas/American Bottling Company
- PepsiCo Assets/Whitman Corporation
- Cameron Coca-Cola Bottling Company/Coca-Cola Enterprises, Inc.
- Select/Beverage Americas/Cadbury Schweppes plc
- Texas Bottling Group, Inc./Coca-Cola Enterprises, Inc.
- Midwest Beverage America/Cadbury Schweppes plc
- Coca-Cola Beverages Ltd./Coca-Cola Enterprises, Inc.
- Snapple Beverage/Triarc Companies, Inc.
- Seven Up/RC Bottling of Southern California, Inc./Dr. Pepper Bottling
Company of Texas
- Nora Beverages, Inc./Coca-Cola Enterprises, Inc.
- Coca-Cola West&Grand Forks/Coca-Cola Enterprises, Inc.
- Ouachita Coca-Cola Bottling Company, Inc./Coca-Cola Enterprises, Inc.
- Grupo Embottelador de Mexico SA de CV/PepsiCo, Inc.
- Wichita Coca-Cola Bottling Co./Coca-Cola Enterprises, Inc.
- Vess Beverages, Inc./Cott Corporation
Salomon Smith Barney compared purchase prices on the selected transactions
as a multiple of (1) last 12 months EBITDA and (2) last 12 months EBIT. All
multiples were based on publicly-available financial information for the
relevant transactions. Applying a range of multiples derived from the selected
transactions to PepsiAmericas' and Whitman's respective estimated calendar year
2000 (a) EBITDA and (b) EBIT resulted in an implied equity reference value range
of approximately $2.48 to $3.91 per share for PepsiAmericas' common stock and
approximately $16.79 to $20.43 per share for Whitman's common stock.
DISCOUNTED CASH FLOW VALUATION. A discounted cash flow analysis provides
insight into the intrinsic value of a business based on the projected financial
results, including capital requirements, and the net present value of the free
cash flow anticipated to be generated by the assets of the business. Salomon
Smith Barney performed discounted cash flow analyses of PepsiAmericas and
Whitman to estimate a range of values for their common stock. The discounted
cash flow analyses for PepsiAmericas and Whitman were based upon certain
financial forecasts for the companies for the years 2000 through 2004 prepared
by their respective managements. Salomon Smith Barney performed discounted cash
flow analyses of PepsiAmericas and Whitman in order to determine the aggregate
net present value of the unlevered free cash flows of PepsiAmericas' and
Whitman's businesses, net of outstanding debt balances.
Salomon Smith Barney applied a terminal value multiple range of 6.5x to 8.5x
to projected EBITDA in year 2004. The unlevered free cash flows were then
discounted to present value using discount rates ranging from 8.5% to 10.5%
based upon an analysis of the respective weighted average costs of capital of
PepsiAmericas and Whitman. These analyses of the forecasts for PepsiAmericas and
Whitman, which assumed PepsiAmericas and Whitman could achieve their forecasted
results, indicated an implied equity value range per share of PepsiAmericas'
common stock of approximately $3.96 to $5.22 on a fully diluted basis and an
implied equity value range per share of Whitman's common stock of approximately
$16.06 to $19.70 on a fully diluted basis.
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DISCOUNTED CASH FLOW VALUATION (SENSITIVITY). Salomon Smith Barney
performed the same analysis described above with the exception of modifications
to PepsiAmericas' five year forecast to account for two different scenarios. In
the first scenario, revenues were adjusted to account for slower volume and
price growth at PepsiAmericas' operations in Puerto Rico and to exclude the
anticipated reduction in operating costs in 2000 and 2001 in Puerto Rico from a
renegotiation of the union contract applicable to those operations. In the
second scenario, the same adjustments from the first scenario were made, and
projections were further adjusted to account for increased costs at
PepsiAmericas' domestic operations. These analyses of the adjusted forecasts for
PepsiAmericas, which assumed PepsiAmericas could achieve adjusted forecasted
results, indicated an implied equity value range per share of PepsiAmericas'
common stock of approximately $3.39 to $4.54 on a fully diluted basis in the
first scenario and $3.05 to $4.19 in the second scenario.
No company used in the public comparable valuation described above is
identical to PepsiAmericas or Whitman. No transaction used in the precedent
transaction valuation described above is identical to the merger. Accordingly,
an examination of the results of the analyses described above necessarily
involves complex considerations and judgments concerning differences in
financial and operating characteristics of the businesses and other facts that
could affect the public trading value or the acquisition value of the companies
to which they are being compared.
The preparation of a fairness opinion is a complex process not susceptible
to partial analysis or summary descriptions. The summary set forth above is not
a complete description of the analyses underlying Salomon Smith Barney's opinion
or its presentation to the PepsiAmericas board of directors. Salomon Smith
Barney believes that its analyses and the summary set forth above must be
considered as a whole and that selecting portions of its analyses and the
factors considered by it, without considering all such analyses and factors,
could create an incomplete view of the processes underlying the analyses set
forth in its opinion.
In performing its analyses, Salomon Smith Barney made numerous assumptions
with respect to industry performance, general business, financial, market and
economic conditions and other matters, many of which are beyond the control of
Whitman or PepsiAmericas. The analyses which Salomon Smith Barney performed are
not necessarily indicative of actual values or actual future results, which may
be significantly more or less favorable than suggested by the analyses. The
analyses were prepared solely as part of Salomon Smith Barney's analysis of the
fairness, from a financial point of view, of the merger consideration to be
received by holders of PepsiAmericas common stock (other than Dakota Holdings).
The analyses do not purport to be appraisals or to reflect the prices at which a
company might actually be sold or the prices at which any securities may trade
at the present time or at any time in the future.
Salomon Smith Barney has acted as financial advisor to PepsiAmericas in
connection with the proposed merger and will receive a fee of approximately
$4.4 million for such services, a significant portion of which is contingent
upon the consummation of the transaction. PepsiAmericas has also agreed to
reimburse Salomon Smith Barney for all reasonable fees and disbursements of
Salomon Smith Barney's counsel up to $25,000 and all of Salomon Smith Barney's
reasonable travel and other expenses incurred in connection with the merger, or
otherwise from Salomon Smith Barney's engagement. PepsiAmericas further agreed
to indemnify Salomon Smith Barney and certain related persons against various
liabilities, including liabilities under the federal securities laws, relating
to or arising out of its engagement.
Salomon Smith Barney has in the past provided investment banking services to
Whitman unrelated to the proposed merger for which services Salomon Smith Barney
has received compensation. In the ordinary course of its business, Salomon Smith
Barney and its affiliates may actively trade or hold the securities of Whitman
and PepsiAmericas for its own account or for the account of its customers and,
accordingly, may at any time hold a long or short position in such securities.
In addition, Salomon
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Smith Barney and its affiliates (including Citigroup Inc. and its affiliates)
may maintain relationships with Whitman, PepsiAmericas and their respective
affiliates.
Salomon Smith Barney is an internationally recognized investment banking
firm that provides financial services in connection with a wide range of
business transactions. As part of its business, Salomon Smith Barney regularly
engages in the valuation of companies and their securities in connection with
mergers and acquisitions and for other purposes. The PepsiAmericas board
retained Salomon Smith Barney based on Salomon Smith Barney's expertise in the
valuation of companies as well as its substantial experience in transactions
similar to the merger.
OPINION OF PEPSIAMERICAS SPECIAL COMMITTEE'S FINANCIAL ADVISOR
On August 17, 2000, Chase Securities Inc. delivered its oral opinion,
subsequently confirmed in writing in an opinion dated as of August 18, 2000, to
the special committee of the board of directors of PepsiAmericas to the effect
that, as of that date and based upon the assumptions made, matters considered
and limits of review set forth in its opinion, the cash alternative, the stock
alternative and the contingent payment alternative, each as elected by a holder
of PepsiAmericas common stock and received by each such holder pursuant to the
merger was fair, from a financial point of view, to the holders of common stock
of PepsiAmericas, other than Whitman, Dakota Holdings and their respective
affiliates.
THE FULL TEXT OF CHASE SECURITIES' WRITTEN OPINION DATED AS OF AUGUST 18,
2000, WHICH SETS FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND CERTAIN
LIMITATIONS ON THE SCOPE OF REVIEW UNDERTAKEN BY CHASE SECURITIES, IS ATTACHED
AS ANNEX D TO THIS JOINT PROXY STATEMENT/PROSPECTUS. SHAREHOLDERS OF
PEPSIAMERICAS ARE URGED TO READ SUCH OPINION IN ITS ENTIRETY. CHASE SECURITIES'
OPINION WAS PROVIDED FOR THE USE AND BENEFIT OF THE SPECIAL COMMITTEE OF THE
BOARD OF DIRECTORS OF PEPSIAMERICAS IN ITS EVALUATION OF THE MERGER, WAS
DIRECTED ONLY TO THE FAIRNESS TO THE HOLDERS OF COMMON STOCK OF PEPSIAMERICAS,
OTHER THAN WHITMAN, DAKOTA HOLDINGS AND THEIR RESPECTIVE AFFILIATES, OF THE
CONSIDERATION TO BE RECEIVED BY SUCH HOLDERS PURSUANT TO THE MERGER FROM A
FINANCIAL POINT OF VIEW AS OF AUGUST 18, 2000, AND DOES NOT CONSTITUTE A
RECOMMENDATION TO ANY SHAREHOLDER OF PEPSIAMERICAS AS TO HOW SUCH HOLDER SHOULD
VOTE WITH RESPECT TO THE MERGER OR ANY MATTER RELATED TO THE MERGER. THE SUMMARY
OF CHASE SECURITIES' OPINION SET FORTH IN THIS JOINT PROXY STATEMENT/PROSPECTUS
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF ITS OPINION
ATTACHED TO THIS DOCUMENT AS ANNEX D.
In arriving at the opinion set forth below, Chase Securities, among other
things:
- reviewed a draft of the merger agreement dated as of August 18, 2000;
- reviewed certain publicly available business information that Chase
Securities deemed relevant relating to PepsiAmericas and Whitman and the
respective industries in which they operate;
- reviewed certain internal non-public financial and operating data and
forecasts furnished to Chase Securities by the managements of
PepsiAmericas and Whitman relating to their respective businesses;
- discussed, with members of the senior managements of PepsiAmericas and
Whitman, PepsiAmericas' and Whitman's operations, historical financial
statements and future prospects, before and after giving effect to the
merger;
- compared the financial and operating performance of PepsiAmericas and
Whitman with publicly available information concerning certain other
companies Chase Securities deemed comparable to PepsiAmericas and Whitman
and reviewed the relevant historical stock prices of PepsiAmericas common
stock and Whitman common stock and certain publicly traded securities of
such other companies;
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- reviewed the financial terms of certain recent business combinations and
acquisition transactions Chase Securities deemed reasonably comparable to
the merger and otherwise relevant to its inquiry; and
- made such other analyses and examinations as Chase Securities deemed
necessary or appropriate.
Chase Securities assumed and relied upon, without assuming any
responsibility for verification, the accuracy and completeness of all of the
financial and other information provided to, discussed with, or reviewed by or
for Chase Securities, or publicly available, for purposes of its opinion and
further relied upon the assurance of the managements of PepsiAmericas and
Whitman that they were not aware of any facts that would make such information
inaccurate or misleading. Chase Securities neither made nor obtained any
independent evaluations or appraisals of the assets or liabilities of
PepsiAmericas or Whitman, nor did Chase Securities conduct a physical inspection
of the properties or facilities of PepsiAmericas or Whitman. Chase Securities
assumed that the financial forecasts provided to or discussed with Chase
Securities by PepsiAmericas and Whitman had been reasonably determined on bases
reflecting the best currently available estimates and judgments of the
managements of PepsiAmericas and Whitman as to the future financial performance
of their respective companies, including giving effect to the merger. Chase
Securities further assumed that, in all material respects, such forecasts and
projections will be realized in the amounts and times indicated in the forecasts
and projections. Chase Securities expressed no view as to such forecasts or
projection information or the assumptions on which they were based.
For purposes of rendering its opinion, Chase Securities assumed that, in all
respects material to its analysis, the representations and warranties of each
party contained in the merger agreement were true and correct, that each party
would perform all of the covenants and agreements required to be performed by it
under the merger agreement and that all conditions to the consummation of the
merger would be satisfied without waiver thereof. Chase Securities further
assumed that all material governmental, regulatory or other consents and
approvals would be obtained and that in the course of obtaining any necessary
governmental, regulatory or other consents and approvals, or any amendments,
modifications or waivers to any documents to which PepsiAmericas, Anchor Merger
Sub or Whitman are a party, as contemplated by the Agreement, no restrictions
would be imposed or amendments, modifications or waivers made that would have
any material adverse effect on the contemplated benefits of the merger. Chase
Securities further assumed that the merger will be accounted for using the
purchase method, with the stock portion of the transaction qualifying for
tax-free treatment for United States federal income tax purposes. With the
consent of the special committee of the board of directors of PepsiAmericas,
Chase Securities assumed that that the cash consideration paid pursuant to the
merger will not fall below $3.80 and that the surviving corporation will meet
the adjusted EBITDA targets as provided in the merger agreement.
In connection with the preparation of its opinion, Chase Securities was not
authorized by PepsiAmericas or the special committee of the board of directors
of PepsiAmericas to solicit, nor did Chase Securities solicit, third-party
indications of interest for the acquisition of all or any part of PepsiAmericas.
Chase Securities' opinion was necessarily based on market, economic and
other conditions as they existed and could be evaluated on the date of the
opinion. Chase Securities' opinion was limited to the fairness, from a financial
point of view, to the holders of the common stock of PepsiAmericas, other than
shares of the common stock of PepsiAmericas owned by Whitman, Dakota Holdings
and their respective affiliates, of the consideration to be received by such
holders in the merger, and Chase Securities expressed no opinion as to the
merits of the underlying decision by PepsiAmericas to engage in the merger.
Chase Securities' opinion did not constitute a recommendation to any holder of
the common stock of PepsiAmericas as to how such shareholder should vote with
respect to the proposed merger or any matter related to the merger. In addition,
Chase Securities expressed no opinion as to
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the prices at which the common stock of PepsiAmericas or Whitman would trade
following the announcement or the consummation of the merger, as the case may
be.
The following is a summary of the material financial and comparative
analyses performed by Chase Securities in arriving at its opinion. Some of these
summaries of financial analyses include information presented in tabular format.
In order to understand fully the financial analyses used by Chase Securities,
the tables must be read together with the text of each summary. The tables alone
do not constitute a complete description of the financial analyses.
COMPARABLE PUBLIC COMPANIES ANALYSIS. Using publicly available information,
Chase Securities compared certain financial and operating information and
ratios, which are described below, for PepsiAmericas and Whitman with
corresponding financial and operating information and ratios for the following
two companies in lines of business believed to be generally comparable to those
of PepsiAmericas and Whitman, as follows:
- Coca-Cola Enterprises Inc.
- The Pepsi Bottling Group, Inc.
In examining the comparable companies, Chase Securities calculated the
enterprise value, defined as the total market value of equity on a diluted basis
plus outstanding debt, preferred stock and minority interest less cash and cash
equivalents, of each company as a multiple of its respective last 12 months,
estimated calendar year 2000 and estimated calendar year 2001 earnings before
interest, taxes, depreciation and amortization, which is referred to as EBITDA.
Chase Securities also calculated the enterprise value of each company as a
multiple of its respective estimated last 12 months and calendar year 2000
revenues. In each valuation, projections were based upon selected public
research analyst estimates. Chase Securities also calculated the multiple of
each company's trading price per share to its respective estimated calendar year
2000 and 2001 earnings per share, which is referred to as EPS.
Based on an analysis of this data and PepsiAmericas management projections,
Chase Securities calculated a per share equity valuation range for PepsiAmericas
from $1.75 to $2.50 based on calendar year 2000 EBITDA projections provided by
PepsiAmericas management, and a per share equity valuation range from $2.00 to
$2.75 based on calendar year 2001 EBITDA projections provided by PepsiAmericas
management.
Based on an analysis of this data and Whitman management projections, Chase
Securities calculated a per share equity valuation range for Whitman from $15.25
to $18.25 based on calendar year 2000 EBITDA projections provided by Whitman
management, and a per share equity valuation range from $14.25 to $17.50 based
on calendar year 2001 EBITDA projections provided by Whitman management.
COMPARABLE TRANSACTIONS ANALYSIS. Chase Securities reviewed certain
publicly available information regarding selected business combinations in the
bottling industry. The comparable transaction and the month in which each
transaction was announced were as follows:
- Carlyle Group and Cadbury Schweppes, PLC/Dr. Pepper Bottling Company of
Texas (August 1999)
- Whitman Corporation/PepsiCo., Inc. assets (May 1999)
- Coca-Cola Enterprises Inc./Independent bottling companies (October 1998)
- Carlyle Group and Cadbury Schweppes, PLC/Beverage America and Beverage
Select (February 1998)
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- Coca-Cola Enterprises Inc. and Coca-Cola Bottling Group
(Southwest) Inc./Texas Bottling Group, Inc. (April 1998)
- Coca-Cola Enterprises Inc./Coca-Cola Beverages Ltd. (May 1997)
- Coca-Cola Enterprises Inc./NORA Beverages Inc. (July 1996)
- Coca-Cola Enterprises Inc./operations of Coca-Cola Beverages S.A.,
Coca-Cola Production S.A. and S.A. Beverage Sales Holding N.V. (May 1996)
- Dr. Pepper Bottling Company of Texas/Seven Up/RC Bottling of Southern
California, Inc. (March 1996)
- Coca-Cola Enterprises Inc./Coca-Cola West, Inc. and Grand Forks Coca-Cola
Bottling Company (May 1996)
- Coca-Cola Enterprises Inc./Ouachita Coca-Cola Bottling Company, Inc.
(October 1995)
- Coca-Cola Enterprises Inc./Wichita Coca-Cola Bottling (October 1994)
- Cott Corporation /Vess Beverages Inc./Vess Specialty Packaging Co.
(May 1994)
In examining these precedent transactions, Chase Securities calculated the
transaction value in each of these precedent transactions as a multiple of the
target's respective last 12 months revenue and last 12 months EBITDA.
Based on an analysis of the comparable transactions data and PepsiAmericas
management projections, Chase Securities calculated a per share equity valuation
range for PepsiAmericas from $2.00 to $3.00 based on last 12 months EBITDA
results provided by PepsiAmericas management, and a per share equity valuation
range from $3.00 to $4.00 based on 2000 EBITDA projections provided by
PepsiAmericas management.
Based on an analysis of the comparable transactions data and Whitman
management projections, Chase Securities calculated a per share equity valuation
range for Whitman from $17.25 to $21.50 based on last 12 months EBITDA results
provided by Whitman management, and a per share equity valuation range from
$20.00 to $24.50 based on 2000 EBITDA projections provided by Whitman
management.
DISCOUNTED CASH FLOW ANALYSIS. Chase Securities performed a discounted cash
flow analysis for PepsiAmericas using financial forecasts for the years ending
December 31, 2000 through December 31, 2004 provided by PepsiAmericas
management, which is referred to as the Management Case, and based upon
projections provided by PepsiAmericas management as of August 2000, which assume
that PepsiAmericas does not achieve its projected margin improvements, which is
referred to as the Conservative Management Case. Chase Securities calculated a
discounted cash flow analysis for PepsiAmericas assuming discount rates ranging
from 9% to 11%, and terminal multiples of EBITDA in the year 2004 ranging from
7.0x to 8.0x. This analysis yielded a per share equity valuation range for
PepsiAmericas from $3.75 to $5.00 for the Management Case, and from $2.75 to
$4.00 for the Conservative Management Case.
Chase Securities also performed a discounted cash flow analysis for Whitman
using financial forecasts for the years ending December 31, 2000 through
December 31, 2004 provided by Whitman management to December 31, 2003, and Chase
Securities estimated projections for 2004 based on extrapolated Whitman
management projections from 2002 to 2003. Chase Securities calculated a
discounted cash flow analysis for PepsiAmericas assuming discount rates ranging
from 9% to 11%, and terminal multiples of EBITDA in the year 2004 ranging from
7.0x to 8.0x. This analysis yielded a per share equity valuation range for
Whitman from $15.25 to $20.00.
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PRO FORMA CONTRIBUTION ANALYSIS. In addition to the above analyses, Chase
Securities estimated the contributions of PepsiAmericas and Whitman to the pro
forma combined company for the stock alternative. Chase Securities estimated the
contribution of each of PepsiAmericas and Whitman to the pro forma combined
company (excluding synergies) with respect to projected revenue, EBITDA and net
income for fiscal years 2000 to 2002. The relative contributions of
PepsiAmericas to the pro forma combined company resulted in implied exchange
ratios ranging from 0.0000x to 0.3269x.
The summary set forth above does not purport to be a complete description of
the analyses performed by Chase Securities in arriving at its opinion. Arriving
at a fairness opinion is a complex process not necessarily susceptible to
partial analysis or summary description. Chase Securities believes that its
analyses must be considered as a whole and that selecting portions of analyses
and of the factors considered by it, without considering all such factors and
analyses, could create a misleading view of the processes underlying its
opinion. Chase Securities did not assign relative weights to any of its analyses
in preparing its opinion. The matters considered by Chase Securities in its
analyses were based on numerous macroeconomic, operating and financial
assumptions with respect to industry performance, general business and economic
conditions and other matters, many of which are beyond PepsiAmericas' and
Whitman's control and involve the application of complex methodologies and
educated judgment. Any estimates incorporated in the analyses performed by Chase
Securities are not necessarily indicative of actual past or future results or
values, which may be significantly more or less favorable than such estimates.
Estimated values do not purport to be appraisals and do not necessarily reflect
the prices at which businesses or companies may be sold in the future, and such
estimates are inherently subject to uncertainty. None of the comparable
companies used in the comparable public companies analysis described above is
identical to PepsiAmericas or Whitman, and none of the comparable transactions
used in the comparable transactions analysis described above is identical to the
proposed merger. Accordingly, an analysis of publicly traded comparable
companies and transactions is not mathematical; rather it involves complex
considerations and judgments concerning differences in financial and operating
characteristics of the comparable companies and other factors that could affect
the public trading value of the comparable companies or company to which they
are being compared.
The special committee of the board of directors of PepsiAmericas selected
Chase Securities to act as its financial advisor on the basis of Chase
Securities' reputation as an internationally recognized investment banking firm
with substantial expertise in transactions similar to the merger. As part of its
financial advisory business, Chase Securities is continually engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions and valuations for estate, corporate and other purposes. Chase
Securities has acted as financial advisor to the special committee of the board
of directors of PepsiAmericas in connection with the delivery of its opinion and
received a fee upon delivery thereof. In addition, PepsiAmericas has agreed to
indemnify Chase Securities for certain liabilities arising out of its
engagement. The Chase Manhattan Corporation and its affiliates, including Chase
Securities Inc., in the ordinary course of business, have provided commercial
and investment banking services to Whitman and its affiliates for which they
received usual and customary compensation and may continue to provide such
services in the future. In the ordinary course of business, Chase Securities or
its affiliates may trade in the debt and equity securities of PepsiAmericas and
Whitman for its own accounts and for the accounts of its customers and,
accordingly, may at anytime hold a long or short position in such securities.
The terms of the engagement of Chase Securities by the special committee of
the board of directors of PepsiAmericas are set forth in a letter dated as of
August 9, 2000. Pursuant to the terms of this letter agreement, PepsiAmericas
paid to Chase Securities a fee of $750,000. In addition, the special committee
of the board of directors of PepsiAmericas has also agreed to reimburse Chase
Securities for its reasonable out-of-pocket expenses (including the fees of its
legal counsel) and to indemnify Chase Securities and certain related persons
from and against certain liabilities in connection with its engagement,
including certain liabilities under the federal securities laws, arising out of
its engagement.
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CERTAIN FINANCIAL PROJECTIONS (UNAUDITED)
PepsiAmericas does not as a matter of course make public forecasts or
projections as to future revenues or results of operations. However, during the
course of negotiations, PepsiAmericas presented certain financial information to
Whitman. The information included estimates by PepsiAmericas' management of
PepsiAmericas' future financial performance presented to management of Whitman
on June 1, 2000 that are set forth below (the "PepsiAmericas Prospective
Financial Information").
The PepsiAmericas Prospective Financial Information was not prepared with a
view towards public disclosure or compliance with either the published
guidelines of the SEC regarding projections or forecasts or the American
Institute of Certified Public Accountants' Guide for Prospective Financial
Statements. The PepsiAmericas Prospective Financial Information was not prepared
in accordance with generally accepted accounting principles and was not audited
or reviewed by independent auditors nor did any independent auditors perform any
services with respect thereto.
The PepsiAmericas Financial Information, while presented with numerical
specificity, was based upon numerous estimates and other assumptions which are
inherently subject to significant business, economic and competitive
uncertainties, contingencies and risks, all of which are difficult to quantify
and many of which are beyond the control of PepsiAmericas. Accordingly, there
can be no assurance that the PepsiAmericas Financial Information will be
realized, and it is likely that future results will vary from those set forth
below, possibly by material amounts. The PepsiAmericas Prospective Financial
Information included the information set forth below:
<TABLE>
<CAPTION>
FISCAL YEAR
(IN MILLIONS)
-------------
2000 2001 2002
---- ---- ----
<S> <C> <C> <C>
EBITDA................................................. $65.6 $76.6 $93.3
</TABLE>
EBITDA is defined as earnings before interest, taxes, depreciation and
amortization.
Whether or not holders of PepsiAmericas common stock participating in the
contingent payment alternative receive additional shares of Whitman common stock
in 2002 and 2003 will depend on PepsiAmericas EBITDA, as adjusted, for each of
fiscal years 2001 and 2002 and for the three-year period beginning January 2,
2000. These contingent payments are described in detail under the heading "The
Merger Agreement--Contingent Payments." Assuming that none of the adjustments to
EBITDA described under that heading apply, if PepsiAmericas achieves, but does
not exceed, projected EBITDA as set forth above, the maximum number of
additional shares of Whitman common stock will be paid for 2001 and 2002
performance, respectively. Additional shares of Whitman common stock will be
paid with respect to the three-year period beginning January 2, 2000 only if
PepsiAmericas' EBITDA, as adjusted, exceeds $235.5 million, which is the sum of
PepsiAmericas' projected EBITDA for that period. The maximum number of
additional shares of Whitman common stock for the period will only be paid if
EBITDA, as adjusted, is at least $247.3 million, which is $11.8 million above
PepsiAmericas' projections.
CERTAIN LITIGATION
On or about August 23, 2000, a lawsuit was filed in the District Court in
Hennepin County, Minnesota, seeking to enjoin the merger of PepsiAmericas and
Whitman. RANDY COX V. CHRISTOPHER E. CLOUSER, ET AL. The complaint, which was
brought by a purported shareholder of PepsiAmericas, names PepsiAmericas, Dakota
Holdings and certain directors of PepsiAmericas as defendants.
The complaint alleges that the consideration to be paid to the public
shareholders of PepsiAmericas in the merger is unfair and inadequate. The
plaintiff seeks, among other things, class action certification, a declaration
that the merger agreement with Whitman is unenforceable, a
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preliminary and permanent injunction against the defendants from proceeding with
or closing the proposed merger unless and until PepsiAmericas implements a
procedure to obtain the highest price for its shareholders, and an award of
damages, attorneys fees and costs of suit.
PepsiAmericas believes that the allegations contained in the Minnesota COX
complaint are without merit and intends to vigorously defend the action.
On August 31, 2000, a lawsuit was filed in the Court of Chancery in and for
New Castle County, Delaware, GENE KILHAM V. PEPSIAMERICAS, INC., ET AL.,
No. 18280, seeking to enjoin the merger of PepsiAmericas and Whitman. The
complaint which was filed by a purported shareholder of PepsiAmericas, names
PepsiAmericas, Dakota Holdings, Whitman and the directors of PepsiAmericas as
defendants. The complaint alleges that the consideration to be paid to the
public shareholders of PepsiAmericas in the merger is inadequate; that the
individual defendants and Dakota Holdings have committed certain breaches of
fiduciary duties; and that Whitman is knowingly participating in those breaches
of fiduciary duties. The plaintiff seeks, among other things, class action
certification, a preliminary and permanent injunction against the defendants
from proceeding with the proposed merger and an award of damages, attorneys
fees, and costs of suit. PepsiAmericas and Whitman believe that the allegations
contained in the KILHAM complaint are without merit and they intend to
vigorously defend the action.
On September 8, 2000, a lawsuit was filed in the Court of Chancery, in and
for New Castle County Delaware, RANDY COX V. PEPSIAMERICAS, INC., ET AL.,
No. 18296, seeking to enjoin the merger of PepsiAmericas and Whitman. The
complaint, which was filed by a purported shareholder of PepsiAmericas, names
PepsiAmericas, Dakota Holdings, Whitman and certain directors of PepsiAmericas
as defendants. The complaint alleges that the consideration to be paid to the
public shareholders of PepsiAmericas in the merger is inadequate, that the
individual defendants and Dakota Holdings have committed certain breaches of
fiduciary duties, and that Whitman is knowingly participating in those breaches
of fiduciary duties. The plaintiff seeks, among other things, class action
certification, a preliminary and permanent injunction against the defendants
from proceeding with the proposed merger and an award of damages, attorneys
fees, and costs of suit.
PepsiAmericas and Whitman believe that the allegations contained in the
Delaware COX complaint are without merit and intend to vigorously defend the
action.
MANAGEMENT FOLLOWING THE TRANSACTION
Bruce S. Chelberg will retire as Whitman's Chairman and Chief Executive
Officer and as a member of the board of directors upon consummation of the
merger. At that time, Robert C. Pohlad, PepsiAmericas' Chairman and Chief
Executive Officer will be appointed as Whitman's Chief Executive Officer and a
member of its board of directors. Also, at that time, Archie R. Dykes, a Whitman
director and the Chairman of its Affiliated Transactions Committee, will become
the nonexecutive Chairman of Whitman's board of directors.
Kenneth E. Keiser, currently President and Chief Operating Officer of
PepsiAmericas, will become President and Chief Operating Officer of Whitman's
United States operations. Larry D. Young, currently President and Chief
Operating Officer of Whitman and Pepsi-Cola General Bottlers, will become
President and Chief Operating Officer of Whitman's international operations.
John F. Bierbaum, currently Senior Vice President and Chief Financial Officer of
PepsiAmericas, will become Executive Vice President, Corporate Growth and
Strategic Planning for Whitman. He will have principal responsibility for
acquisitions, as well as for Whitman's non-bottling related assets.
ACCOUNTING TREATMENT
The merger will be accounted for under the purchase method of accounting for
financial accounting purposes in accordance with United States generally
accepted accounting principles.
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Purchase accounting requires that the purchase price and costs of the
acquisition be allocated to all of the assets acquired and liabilities assumed,
based on their relative fair values. See "Pro Forma Combined Financial
Information (Unaudited)."
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following general discussion summarizes the anticipated material United
States federal income tax consequences of the merger to holders of PepsiAmericas
common stock who elect the cash alternative, the stock alternative, the
contingent payment alternative, or any combination of these three alternatives.
This discussion addresses only those shareholders who hold their PepsiAmericas
common stock as a capital asset, and does not address all of the federal income
tax consequences that may be relevant to particular shareholders in light of
their individual circumstances or to shareholders who are subject to special
rules, such as financial institutions, mutual funds, tax-exempt organizations,
insurance companies, dealers in securities or foreign currencies, traders in
securities who elect to apply a mark-to-market method of accounting, foreign
holders, persons who hold their shares as a hedge against currency risk or as
part of a straddle, constructive sale or conversion transaction, or holders who
acquired their shares upon the exercise of employee stock options or otherwise
as compensation.
The following discussion is not binding on the Internal Revenue Service. It
is based upon the Internal Revenue Code of 1986, as amended, laws, regulations,
rulings and decisions in effect as of the date of this joint proxy
statement/prospectus, all of which are subject to change, possibly with
retroactive effect. Tax consequences under state, local and foreign laws, and
federal laws other than federal income tax laws, are not addressed.
Holders of PepsiAmericas common stock are strongly urged to consult their
tax advisors as to the specific tax consequences to them of the merger,
including the applicability and effect of federal, state, local and foreign
income and other tax laws in their particular circumstances.
It is a condition to the completion of the merger that each of Whitman,
Anchor Merger Sub and PepsiAmericas receive an opinion of its counsel, dated as
of the effective time of the merger, to the effect that the merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368 of the Internal Revenue Code and that each of Whitman and
PepsiAmericas will be a party to the reorganization within the meaning of
Section 368 of the Internal Revenue Code.
In rendering their opinions, counsel will be entitled to rely upon, among
other things, representations of officers of Whitman and PepsiAmericas. An
opinion of counsel represents counsel's best legal judgment and is not binding
on the Internal Revenue Service or any court. No ruling has been, or will be,
sought from the Internal Revenue Service as to the federal income tax
consequences of the merger. The following discussion of federal income tax
consequences of the merger to PepsiAmericas shareholders assumes that the merger
will qualify as a reorganization within the meaning of Section 368 of the
Internal Revenue Code.
GAIN OR LOSS RECOGNITION
SHAREHOLDERS ELECTING TO RECEIVE ONLY CASH. If you exchange all of your
shares of PepsiAmericas common stock solely for cash in the merger, you will
recognize capital gain or loss equal to the difference between the amount of
cash received and the tax basis in your shares of PepsiAmericas common stock
exchanged. If you are an individual and have held your PepsiAmericas common
stock for more than 12 months on the date of the merger, your capital gain
generally will be subject to a maximum federal income tax rate of 20%. The
deductibility of capital losses is subject to limitations for both individuals
and corporations.
SHAREHOLDERS ELECTING TO RECEIVE ONLY STOCK. If you exchange all of your
shares of PepsiAmericas common stock solely for shares of Whitman common stock
in the merger (including shares to be received from choosing the contingent
payment alternative), you will not recognize any gain or loss,
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except with respect to cash received in lieu of fractional shares of Whitman
common stock and amounts treated as imputed interest income with respect to any
contingent shares received (as described below). Any cash you receive in lieu of
fractional shares of Whitman common stock will be treated as received in
exchange for that fractional share interest, and you will recognize capital gain
or loss equal to the difference between the amount of cash received and the
portion of the basis of the PepsiAmericas common stock allocable to the
fractional share interest (determined as described below).
If you choose the contingent payment alternative, a portion of the value of
any shares of Whitman common stock you receive as part of the contingent
payments will be treated as imputed interest under Section 483 of the Internal
Revenue Code and will generally be taxable to you in the year the contingent
payment is received. The amount treated as interest cannot be determined until
the year in which the contingent shares are received. Pursuant to Treasury
Regulations, the amount of imputed interest is equal to the excess of the fair
market value of the contingent shares received over the present value of such
fair market value as of the effective time of the merger, discounted at the
applicable federal rate in effect for imputed interest at the effective time of
the merger. Currently, the applicable federal rate is [ %]. Barring a
significant change in general market interest rates, the rate in effect at the
effective time of the merger should not differ significantly from this rate. In
general, imputed interest payments aggregating $600 or more to a non-corporate
recipient are required to be reported to the Internal Revenue Service and the
recipient thereof. However, imputed interest payments must be included in your
taxable income, regardless of whether the payor provides you with notice of the
imputed interest amount. Any amount treated as interest will be added to the tax
basis of the contingent shares to be allocated in the manner described below.
SHAREHOLDERS ELECTING TO RECEIVE BOTH CASH AND STOCK. If you exchange some
of your shares of PepsiAmericas common stock for cash and others for stock
(including shares to be received from choosing the contingent payment
alternative) in the merger, you will recognize gain, but not loss, in the
exchange. The gain, if any, recognized will equal the lesser of:
- the amount of cash you receive in the exchange; and
- the amount of overall gain realized in the exchange.
The amount of overall gain that is realized in the exchange will equal the
excess of:
- the sum of (a) the cash, plus (b) the fair market value of the Whitman
common stock received at the effective time of the merger, plus (c) if you
have chosen the contingent payment alternative, the fair market value of
the Whitman common stock to be received and the fair market value of the
right to purchase additional shares of Whitman common stock; over
- the tax basis of your shares of PepsiAmericas common stock surrendered in
the exchange.
If you choose the contingent payment alternative, the extent of your overall
gain realized, and the extent to which the cash you receive will be taxable,
will not be certain as of the effective time of the merger. YOU ARE STRONGLY
URGED TO CONSULT YOUR OWN TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF
CHOOSING THE CASH ALTERNATIVE FOR SOME OF YOUR SHARES AND THE CONTINGENT PAYMENT
ALTERNATIVE FOR OTHER SHARES. In addition, if you choose the contingent payment
alternative, a portion of the value of any shares of Whitman common stock you
receive as part of the contingent payments will be treated as imputed interest
under Section 483 of the Internal Revenue Code as described above.
Determinations of the amount of recognized gain, tax basis and holding
period must be made separately for each block of PepsiAmericas common stock
surrendered. For this purpose, all of the cash and Whitman common stock received
generally will be allocated proportionately among blocks of PepsiAmericas common
stock surrendered.
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Any gain recognized will be treated as capital gain except in any case in
which the receipt of cash has the effect of the distribution of a dividend for
federal income tax purposes (under Sections 302 and 356 of the Internal Revenue
Code) in which case such recognized gain generally will be treated as ordinary
dividend income. In general, if immediately prior to the merger you (a) do not
actually or constructively (under Section 318 of the Internal Revenue Code) own
any Whitman common stock and (b) are not a significant shareholder of
PepsiAmericas, your receipt of cash will not have the effect of the distribution
of a dividend. You should consult your own tax advisor to determine the
applicability of the foregoing rules in light of your specific facts and
circumstances.
BASIS
Your aggregate tax basis in any non-cash consideration received in the
merger will be equal to the aggregate tax basis in your shares of PepsiAmericas
common stock surrendered in the merger, decreased by the amount of cash received
and increased by the amount of gain, if any, recognized (or any amount treated
as a dividend as described above).
SPECIAL RULES FOR SHAREHOLDERS CHOOSING THE CONTINGENT PAYMENT
ALTERNATIVE. If you choose the contingent payment alternative for any of your
shares of PepsiAmericas common stock, your aggregate tax basis in the non-cash
merger consideration (as determined above) must be allocated not only to the
Whitman common stock received at the effective time of the merger, but also to
any shares to be received as a result of the contingent payment alternative and
to the right to purchase additional shares of Whitman common stock, as described
below. Until the final number of shares, if any, to be received as a result of
the contingent payment alternative is determined, you will have a temporary
estimated tax basis in the shares received at the effective time of the merger
and on any contingent share delivery date. This temporary basis generally will
be equal to your aggregate tax basis in the Whitman common stock multiplied by a
fraction, the numerator of which is the number of shares you have already
received and the denominator of which is the sum of the number of shares you
have already received and the maximum number of remaining shares which you could
receive as a result of choosing the contingent payment alternative. This
temporary basis will increase each time you receive additional shares as
contingent payments, and should be allocated pro rata among the shares of
Whitman common stock you have already received from time to time. In addition,
the basis of any shares received on a contingent share delivery date should be
increased by the amount treated as imputed interest (as described above).
Under the formula set forth in the merger agreement, for every share of
Whitman common stock received at the effective time of the merger as a result of
choosing the contingent payment alternative, a shareholder will receive, at
most, 0.536 shares of Whitman common stock in future periods. Thus, assuming you
did not elect to receive any shares of Whitman common stock other than pursuant
to the contingent payment alternative, you would allocate approximately 65.1% of
your aggregate tax basis in the Whitman common stock to the shares of Whitman
common stock received at the effective time of the merger until the first
contingent share delivery date. On each contingent share delivery date, you
would allocate your aggregate tax basis in Whitman common stock among all the
shares of Whitman common stock you have received and the maximum number of
remaining shares which you could receive, as described above. On the final
contingent share delivery date, you would allocate your entire aggregate tax
basis in Whitman common stock among the shares actually received.
If you sell shares of Whitman common stock prior to the time the final
number of shares to be received as a result of choosing the contingent payment
alternative has been determined, you should use the temporary basis described
above to calculate gain or loss on the sale. You would then allocate your
remaining basis among the shares retained and to be received in a manner similar
to the method described above. AS A RESULT OF THESE RULES, IF YOU SELL SHARES OF
WHITMAN COMMON STOCK PRIOR TO THE TIME THE FINAL NUMBER OF SHARES TO BE RECEIVED
AS A RESULT OF CHOOSING THE CONTINGENT PAYMENT ALTERNATIVE HAS BEEN DETERMINED,
YOU MAY RECOGNIZE MORE GAIN (OR LESS LOSS) FOR TAX PURPOSES THAN
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WOULD BE THE CASE IF YOU HAD SOLD SHARES AT THE SAME PRICE AFTER SUCH TIME. YOU
ARE STRONGLY URGED TO CONSULT YOUR OWN TAX ADVISOR IF YOU PLAN SUCH A SALE.
HOLDING PERIOD
The holding period of the Whitman common stock you receive at the effective
time of the merger will include the holding period of the PepsiAmericas common
stock that you surrender in the merger.
If you choose the contingent payment alternative, your holding period for
each share received after the effective time of the merger will be split. Your
holding period for that portion of each contingent share which is taxed as
interest under the imputed interest rules discussed above will commence on the
date on which the contingent share is received and your holding period for the
remaining portion of each contingent share will include the holding period for
the PepsiAmericas common stock surrendered in the merger.
RIGHT TO PURCHASE ADDITIONAL SHARES OF WHITMAN COMMON STOCK
As described above, if you choose the contingent payment alternative you
will have the right to purchase additional shares of Whitman common stock.
Although you will not recognize gain or loss as a result of the receipt of this
right, if you also elect the cash alternative for some of your shares of
PepsiAmericas common stock, the fair market value of this right should be
included in the determination of your overall gain realized in the merger. A
portion of your aggregate tax basis in the Whitman common stock received and to
be received in the merger (determined as set forth above) should be allocated
between such Whitman common stock and such right to purchase Whitman common
stock in proportion to their respective fair market values. Any basis allocable
to the right will be added to the basis of any Whitman common stock purchased
under the right and, although unclear, may give rise to a capital loss if the
right is not exercised. This paragraph does not describe special rules that may
apply to Dakota Holdings.
ANTITRUST
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the rules promulgated thereunder by the Federal Trade Commission, the merger
can not be completed until the expiration of a 30-calendar-day waiting period
following the filing of certain required information and documentary material
concerning the merger with the Federal Trade Commission and the Antitrust
Division of the Department of Justice. Whitman and PepsiAmericas each filed a
Hart-Scott-Rodino Premerger Notification and Report Form with the Federal Trade
Commission and the Antitrust Division of the Department of Justice on [date],
2000. The required waiting period with respect to the merger will expire at
11:59 p.m., New York City time, on [date], 2000.
The Federal Trade Commission and the Antitrust Division of the Department of
Justice may review the legality of the merger under the antitrust laws. At any
time before or after completion of the merger, the Federal Trade Commission or
the Antitrust Division of the Department of Justice could take any action under
the antitrust laws that either considers necessary or desirable in the public
interest, including seeking to enjoin or rescind the merger or seek the
divestiture of particular assets of Whitman, PepsiAmericas, or any of their
respective subsidiaries or affiliates. Private parties as well as state
attorneys general may also bring legal actions under the antitrust laws under
certain circumstances.
Based upon an examination of publicly available information relating to the
businesses in which Whitman and PepsiAmericas are engaged, Whitman and
PepsiAmericas believe that the merger should not violate the applicable
antitrust laws. Nevertheless, Whitman and PepsiAmericas cannot be certain that a
challenge to the merger on antitrust grounds will not be made or, if such
challenge were made, what the result would be.
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APPRAISAL RIGHTS
The following summary of the provisions of Section 262 of the Delaware
General Corporation Law is not intended to be a complete statement of the
provisions and is qualified in its entirety by reference to the full text of
Section 262 of the Delaware General Corporation Law, a copy of which is
incorporated by reference and attached to this joint proxy statement/prospectus
as Annex E.
Under the Delaware General Corporation Law, only holders of PepsiAmericas
Class A common stock are entitled to appraisal rights. Holders of PepsiAmericas
Class A common stock who want to exercise appraisal rights must strictly comply
with the rules governing the exercise of appraisal rights or they will lose
those rights.
If the merger is completed, each holder of shares of PepsiAmericas Class A
common stock who:
- files written notice with PepsiAmericas of an intention to exercise rights
to appraisal of his or her shares prior to the PepsiAmericas special
meeting; and
- follows the procedures set forth in Section 262 of the Delaware General
Corporation Law
will be entitled to be paid for his or her shares of PepsiAmericas Class A
common stock the fair value in cash of such shares of PepsiAmericas Class A
common stock.
All written demands for appraisal rights should be mailed or delivered prior
to the special meeting to PepsiAmericas, Inc., 3800 Dain Rauscher Plaza, 60
South Sixth Street, Minneapolis, Minnesota 55402, Attention: Corporate
Secretary. The fair value of shares of PepsiAmericas Class A common stock will
be determined by the Delaware Court of Chancery, exclusive of any element of
value arising from the merger. The shares of PepsiAmericas Class A common stock
with respect to which holders have perfected their appraisal rights in
accordance with Section 262 of the Delaware General Corporation Law and have not
effectively withdrawn or lost their appraisal rights are referred to in this
joint proxy statement/prospectus as the "DISSENTING SHARES."
Within ten days after the effective date of the merger, PepsiAmericas
(originally known as Anchor Merger Sub), as the surviving corporation in the
merger, must mail a notice to all shareholders who have complied with the first
bullet point above notifying those shareholders of the effective date of the
merger. Within 120 days after the effective date of the merger, holders of
shares of PepsiAmericas Class A common stock may file a petition in the Delaware
Court of Chancery for the appraisal of their shares, although they may, within
60 days of the effective date of the merger, withdraw their demand for
appraisal. Within 120 days of the effective date of the merger, the holders of
dissenting shares may also receive from PepsiAmericas, upon written request, a
statement setting forth the aggregate number of shares with respect to which
demands for appraisals have been received.
Appraisal rights are available only to record holders of shares of
PepsiAmericas Class A common stock. If you wish to exercise appraisal rights but
have a beneficial interest in shares which are held of record by or in the name
of another person, such as a broker or nominee, you should act promptly to cause
the record holder to follow the procedures set forth in Section 262 of the
Delaware General Corporation Law to perfect your appraisal rights.
A demand for appraisal should be signed by or on behalf of the shareholder
exactly as the shareholder's name appears on the shareholder's stock
certificates. If the shares are owned of record in a fiduciary capacity, such as
by a trustee, guardian or custodian, the demand should be executed in that
capacity, and if the shares are owned of record by more than one person, as in a
joint tenancy or tenancy in common, the demand should be executed by or on
behalf of all joint owners. An authorized agent, including one or more joint
owners, may execute a demand for appraisal on behalf of a record holder,
provided that, in the demand, the agent identifies the record owner or owners
and expressly discloses that the agent is executing the demand as an agent for
the record owner or owners. A record holder such as a broker who holds shares as
nominee for several beneficial owners may exercise
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appraisal rights for the shares held for one or more beneficial owners and not
exercise rights for the shares held for other beneficial owners. In this case,
the written demand should state the number of shares for which appraisal rights
are being demanded. When no number of shares is stated, the demand will be
presumed to cover all shares held of record by the broker or nominee.
If any holder of shares of PepsiAmericas Class A common stock who demands
appraisal of his or her shares under Section 262 of the Delaware General
Corporation Law fails to perfect, or effectively withdraws or loses the right to
appraisal, his or her shares will be converted into a right to receive the stock
consideration with respect to the holder's dissenting shares in accordance with
the merger agreement. Dissenting shares lose their status as dissenting shares
if:
- the merger is abandoned;
- the dissenting shareholder fails to make a timely written demand for
appraisal;
- the dissenting shares are voted in favor of the merger;
- neither PepsiAmericas nor the shareholder files a complaint or intervenes
in a pending action regarding appraisal rights within 120 days after the
effective date of the merger; or
- the shareholder delivers to PepsiAmericas (formerly Anchor Merger Sub), as
the surviving corporation, within 60 days of the effective date of the
merger, or thereafter with Whitman's approval, a written withdrawal of the
shareholder's demand for appraisal of the dissenting shares, although no
appraisal proceeding in the Delaware Court of Chancery may be dismissed as
to any shareholder without the approval of the court.
Failure to follow the steps required by Section 262 of the Delaware General
Corporation Law for perfecting appraisal rights may result in the loss of
appraisal rights, in which event a PepsiAmericas shareholder will be entitled to
receive the consideration with respect to the holder's dissenting shares in
accordance with the merger agreement. In view of the complexity of the
provisions of Section 262 of the Delaware General Corporation Law, holders of
PepsiAmericas Class A common stock who are considering objecting to the merger
should consult their own legal advisors.
FEDERAL SECURITIES LAWS CONSEQUENCES; STOCK TRANSFER RESTRICTION AGREEMENTS
All shares of Whitman common stock received by PepsiAmericas shareholders in
the merger will be freely transferable, except that shares of Whitman common
stock received by persons who are deemed to be "affiliates" of PepsiAmericas
under the Securities Act of 1933, as amended, at the time of the PepsiAmericas
special meeting, may be resold by them only in transactions permitted by
Rule 145 under the Securities Act of 1933 or as otherwise permitted under the
Securities Act of 1933. Persons who may be deemed to be affiliates of
PepsiAmericas for such purposes generally include individuals or entities that
control, are controlled by or are under common control with PepsiAmericas and
include directors and executive officers of PepsiAmericas. The merger agreement
requires PepsiAmericas to use its reasonable best efforts to cause each of its
affiliates to execute a written agreement to the effect that he or she will not
offer, sell or otherwise dispose of any of the shares of Whitman common stock
issued to them in the merger in violation of the Securities Act or the related
SEC rules.
EXCHANGE PROCEDURES
If you are a record holder of shares of PepsiAmericas common stock, we will
send to you a form of election and letter of transmittal. In addition, we will
make the form of election and letter of transmittal available to all persons who
become record holders of shares of PepsiAmericas common stock after the date of
such mailing and no later than the last business day prior to the election
deadline (defined below). The form of election and letter of transmittal contain
instructions for
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exchanging your shares for cash and/or Whitman common stock. Please carefully
review, complete and return the form in the envelope according to the
instructions contained in the form. In order to be effective, a form of election
and letter of transmittal must be received by the exchange agent by 5:00 p.m.,
New York City time, on the tenth business day after the effective time of the
merger (such day, the "ELECTION DEADLINE"). All elections may be revoked in
writing until the election deadline by the record holders submitting forms of
election.
Upon surrender of a certificate representing shares of PepsiAmericas common
stock to the exchange agent for cancellation, together with a duly executed
letter of transmittal and such other documents as the exchange agent may
require, the holder of such certificate will be entitled to receive in exchange
therefor, as soon as practicable after the effective time of the merger:
- a certificate representing that number of shares of Whitman common stock
into which the shares of PepsiAmericas common stock previously represented
by such PepsiAmericas certificate have been converted, if any;
- the cash to which such holder is entitled, if any; and
- the cash in lieu of fractional shares of Whitman common stock which such
holder has the right to receive, if any.
In the event cash and/or shares of Whitman common stock are to be delivered
to any person other than the person in whose name the PepsiAmericas certificate
surrendered in exchange therefor is registered in the transfer records of
PepsiAmericas, the cash and/or shares of Whitman common stock may be delivered
to such person if the PepsiAmericas certificate is presented to the exchange
agent, accompanied by all documents required to evidence and effect such
transfer and by evidence satisfactory to the exchange agent that any applicable
stock transfer taxes have been paid. Until so surrendered, each PepsiAmericas
certificate will be deemed at any time after the effective time of the merger to
represent only the right to receive (upon such surrender) cash and/or shares of
Whitman common stock pursuant to the merger. No interest will be paid or will
accrue on any cash payable to holders of PepsiAmericas certificates.
Holders of certificates previously representing PepsiAmericas common stock
will not be paid dividends or distributions on the Whitman common stock into
which their shares have been converted with a record date after the merger, and
will not be paid cash for any fractional shares of Whitman common stock, until
their certificates are surrendered to the exchange agent for exchange. When
their certificates are surrendered, any unpaid dividends and any cash instead of
fractional shares will be paid without interest.
In lieu of any fractional shares of Whitman common stock, each holder of
shares of PepsiAmericas common stock who would otherwise have been entitled to a
fraction of a share of Whitman common stock will be paid an amount in cash,
without interest, equal to such holder's proportionate interest in the net
proceeds from the sale or sales in the open market by the exchange agent, on
behalf of all such holders, of the aggregate fractional shares of Whitman common
stock issued. Whitman will pay all commissions, transfer taxes and other
out-of-pocket transaction costs, including the expenses and compensation of the
exchange agent, incurred in connection with such sale.
In the event that a holder of shares of PepsiAmericas common stock fails to
make an election with respect to the consideration to be received in the merger,
such holder will be treated as having elected the stock alternative with respect
to those shares.
AMENDMENT TO WHITMAN RIGHTS AGREEMENT
In connection with entering into the merger agreement, Whitman amended the
Rights Agreement, dated as of May 20, 1999, by and between Whitman and First
Chicago Trust Company of New York, as
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rights agent. The rights agreement is designed to protect Whitman shareholders
from coercive or unfair takeover tactics. See "Comparison of Shareholder
Rights--Rights Agreement." The amendment to the rights agreement provides that:
- None of Pohlad Companies, any affiliate of Pohlad Companies, Robert
Pohlad, affiliates of Robert C. Pohlad or PepsiAmericas will be deemed an
"Acquiring Person" (as defined in the rights agreement) solely by virtue
of (1) the consummation of the transactions contemplated by the merger
agreement, (2) the acquisition by Dakota Holdings of shares of Whitman
common stock in connection with the merger, or (3) the acquisition of
shares of Whitman common stock permitted by the Pohlad shareholder
agreement;
- Dakota Holdings will not be deemed an "Acquiring Person" (as defined in
the rights agreement) so long as it is owned solely by Robert C. Pohlad,
affiliates of Robert C. Pohlad, PepsiCo and/or affiliates of PepsiCo; and
- A "Distribution Date" (as defined in the rights agreement) will not occur
solely by reason of the execution, delivery and performance of the merger
agreement or the consummation of any of the transactions contemplated by
the merger agreement.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
PEPSIAMERICAS' DIRECTORS AND EXECUTIVE OFFICERS. Some of the directors and
executive officers of PepsiAmericas have interests in the merger that are
different from, and/or are in addition to, the interests of PepsiAmericas
shareholders. These interests include the agreement to appoint Robert C. Pohlad,
the Chairman and Chief Executive Officer of PepsiAmericas, as the Chief
Executive Officer and a director of Whitman at the effective time of the merger
and the right of PepsiAmericas directors and officers to continued
indemnification and insurance coverage by Whitman for acts or omissions
occurring prior to the merger. For information concerning the interests of
Mr. Pohlad in the merger, see "The Merger Agreement--Principal Covenants--Board
of Directors and Chief Executive Officer of Whitman." In connection with the
consummation of the merger, Kenneth E. Keiser, currently President and Chief
Operating Officer of PepsiAmericas, will become President and Chief Operating
Officer of Whitman's United States operations and John F. Bierbaum, currently
Senior Vice President and Chief Financial Officer of PepsiAmericas, will become
Executive Vice President, Corporate Growth and Strategic Planning for Whitman.
See "The Merger--Management Following the Transaction."
WHITMAN DIRECTOR. At the effective time of the merger, Archie R. Dykes, a
Whitman director and the Chairman of its Affiliated Transaction Committee will
become the non-executive Chairman of the board of directors of Whitman.
OPTION TO PURCHASE ADDITIONAL WHITMAN COMMON STOCK PURSUANT TO THE MERGER
AGREEMENT. Whitman has agreed to sell shortly after the closing date of the
merger an aggregate of up to 1,710,863 shares of its common stock, at a price of
$14.6125 per share, to the PepsiAmericas shareholders who participate in the
contingent payment alternative. Each PepsiAmericas shareholder who participates
in the contingent payment alternative will be allowed, but not obligated, to
purchase a number of Whitman shares that will depend on the extent to which the
other PepsiAmericas shareholders select the contingent payment alternative.
Dakota Holdings will have the right to purchase, at a price of $14.6125 per
share, any of these shares that are not purchased by the other PepsiAmericas
shareholders initially entitled to purchase them. In addition, Pohlad Companies
has separately negotiated the right to purchase up to $25 million of Whitman
common stock currently held by PepsiCo at that same price. Robert C. Pohlad is
the President of Pohlad Companies and the beneficial owner of one-third of the
stock of Pohlad Companies. For information concerning the interests of the
PepsiAmericas shareholders who participate in the contingent payment alternative
in the merger, see "The Merger Agreement--Option to Purchase Additional Whitman
Common Stock."
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PEPSIAMERICAS' RELATIONSHIP WITH PEPSICO. PepsiCo indirectly owns 33.5% of
the voting membership interests in Dakota Holdings through its wholly owned
subsidiaries, Beverages, Food & Service Industries, Inc. and Pepsi-Cola
Metropolitan Bottling Company, Inc. Pohlad Companies directly owns 66.5% of the
voting membership interests in Dakota Holdings. Dakota Holdings owns shares of
PepsiAmericas' common stock having approximately 72% of the voting power of the
outstanding PepsiAmericas common stock.
PepsiAmericas is a licensed producer and distributor of Pepsi-Cola
carbonated soft drinks and other beverages. PepsiAmericas purchases from PepsiCo
the concentrate used to produce these carbonated soft drinks and other
beverages. PepsiAmericas is not obligated to purchase from PepsiCo any specific
or minimum quantity of concentrate, and does not pay PepsiCo any other fees or
payments.
PepsiAmericas and PepsiCo share the common business objective of increasing
the market share of Pepsi-Cola products. In furtherance of this, PepsiCo
provides PepsiAmericas with marketing support in a variety of forms, including
marketplace support, marketing programs and equipment and shared media expense.
There are no conditions or requirements that could result in the repayment of
any marketing support payments received by PepsiAmericas from PepsiCo.
PepsiAmericas manufactures, distributes and services fountain beverage
equipment to other PepsiCo customers in accordance with various agreements.
PepsiAmericas also produces or distributes other products and purchases finished
goods and concentrate through various arrangements with PepsiCo or partners of
PepsiCo.
WHITMAN'S RELATIONSHIP WITH PEPSICO. PepsiCo holds, directly or indirectly,
shares of Whitman common stock having approximately 40% of the voting power of
the outstanding shares of Whitman common stock.
Pepsi-Cola General Bottlers, Whitman's principal operating company, is a
licensed producer and distributor of PepsiCo carbonated soft drinks and other
non-alcoholic beverages. Pepsi-Cola General Bottlers purchases concentrate from
PepsiCo to be used in the production of these carbonated soft drinks and other
non-alcoholic beverages.
PepsiCo and Pepsi-Cola General Bottlers share a business objective of
increasing availability and consumption of PepsiCo's brands. Accordingly,
PepsiCo provides Pepsi-Cola General Bottlers with various forms of marketing
support to promote PepsiCo's brands. This support covers a variety of
initiatives, including market place support, marketing programs, marketing
equipment and related program support and shared media expense. There are no
conditions or requirements which could result in the repayment of any support
payments received by Pepsi-Cola General Bottlers.
Pepsi-Cola General Bottlers manufactures and distributes fountain products
and provides fountain equipment service to PepsiCo customers in certain
territories in accordance with various agreements. There are other products
which Pepsi-Cola General Bottlers produces and/or distributes through various
arrangements with PepsiCo or partners of PepsiCo.
INTERESTS OF POHLAD COMPANIES. PepsiAmericas maintains management
agreements with Pohlad Companies. For services performed pursuant to the
management agreements, PepsiAmericas pays Pohlad Companies management fees.
Management fees of approximately $3,005,000, $774,000 and $644,000 were recorded
in the fiscal year ended December 31, 1999, the three months ended December 31,
1998, and in the fiscal year ended September 30, 1998 (which only included the
results of Delta Beverage and Dakota Beverage for the period from July 17, 1998,
the earliest date that Pohlad Companies had common control of PepsiAmericas, to
September 30, 1998), respectively. The management agreements will be terminated
as of the effective time of the merger.
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INDEMNIFICATION AND INSURANCE
The merger agreement provides that after the effective time of the merger,
Whitman will indemnify, defend and hold harmless, each present and former
director and officer of PepsiAmericas and each subsidiary of PepsiAmericas and
each such individual who served at the request of PepsiAmericas or any
subsidiary of PepsiAmericas as a director, officer, trustee, partner, fiduciary,
employee or agent of another corporation, partnership, joint venture, trust,
pension or other employee benefit plan or enterprise against all losses, costs,
obligations, liabilities, settlement payments, awards, judgments, fines,
penalties, damages, expenses, monetary deficiencies or other charges (including
reasonable attorneys' fees) paid in connection with any claim, action, suit,
proceeding or investigation (whether arising before or after the effective time
of the merger), whether civil, administrative or investigative, arising out of
or pertaining to any action or omission in their capacity as an officer or
director of PepsiAmericas or any subsidiary of PepsiAmericas, as applicable, in
each case occurring prior to the effective time of the merger (including the
transactions contemplated by the merger agreement).
The merger agreement further provides that for six years from the effective
time of the merger, Whitman will provide to PepsiAmericas' current directors and
officers liability insurance protection of the same kind and scope as that
provided by PepsiAmericas' directors' and officers' liability insurance policies
in effect on the date of the merger agreement. In no event will Whitman be
required to expend more than 200% of the last annual premium paid by
PepsiAmericas prior to the date of the merger agreement to maintain or procure
such insurance coverage. If Whitman is unable to maintain or obtain such
insurance, Whitman will use all reasonable efforts to obtain as much comparable
insurance as available at such expense.
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THE MERGER AGREEMENT
We believe this summary describes the material terms of the merger
agreement. However, we recommend that you carefully read the complete text of
the merger agreement, which is incorporated by reference and attached as Annex A
to this joint proxy statement/prospectus, for the precise legal terms of the
transaction and other information that may be important to you.
STRUCTURE OF THE MERGER
Pursuant to the terms of the merger agreement, PepsiAmericas will merge with
and into Anchor Merger Sub with Anchor Merger Sub continuing as the surviving
corporation.
TIMING OF CLOSING
The closing of the merger will occur on the earliest practicable date (but
no later than the fifth business day) following the satisfaction or waiver of
the conditions to the merger contained in the merger agreement. As a result of
the merger, the separate corporate existence of PepsiAmericas will cease and
Anchor Merger Sub will continue as the surviving corporation and will change its
name to "PepsiAmericas, Inc."
MERGER CONSIDERATION
At the effective time of the merger:
- shares of PepsiAmericas common stock held by PepsiAmericas or owned by
Whitman or any wholly owned subsidiary of Whitman will be canceled and
will cease to exist; and
- holders of shares of PepsiAmericas common stock (other than Dakota
Holdings, Pohlad Companies and holders of shares of PepsiAmericas Class A
common stock who perfect their appraisal rights under Delaware law) will
have the right to elect one of the following alternatives and to receive
the per share consideration indicated below:
<TABLE>
<CAPTION>
CONSIDERATION TO BE RECEIVED PER SHARE IF WHITMAN REFERENCE PRICE IS:
------------------------------------------------------------------------
BETWEEN $13.1513
ALTERNATIVES AND $16.0738 GREATER THAN $16.0738 LESS THAN $13.1513
---------------------------- -------------------------- --------------------- -------------------
<S> <C> <C> <C>
CASH ALTERNATIVE $3.80 in cash An amount in cash An amount in cash
(SUBJECT TO PRORATION AS equal to 0.2364 equal to 0.2889
DESCRIBED BELOW) MULTIPLIED BY the MULTIPLIED BY the
Whitman reference Whitman reference
price price
(We will refer to this as the "CASH CONSIDERATION.")
STOCK ALTERNATIVE The number of shares of 0.2364 shares of 0.2889 shares of
Whitman common stock equal Whitman common stock Whitman common
to $3.80 DIVIDED BY the stock
Whitman reference price
(We will refer to this as the "STOCK CONSIDERATION" and the number of
shares into which a share of PepsiAmericas common stock will be
converted pursuant to a stock alternative as the "EXCHANGE RATIO.")
</TABLE>
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<TABLE>
<CAPTION>
CONSIDERATION TO BE RECEIVED PER SHARE IF WHITMAN REFERENCE PRICE IS:
------------------------------------------------------------------------
BETWEEN $13.1513
ALTERNATIVES AND $16.0738 GREATER THAN $16.0738 LESS THAN $13.1513
---------------------------- -------------------------- --------------------- -------------------
<S> <C> <C> <C>
CONTINGENT PAYMENT The number of shares of 0.1741 shares of 0.2128 shares of
ALTERNATIVE Whitman common stock equal Whitman common stock, Whitman common
to $2.80 DIVIDED BY the PLUS the right to stock, PLUS the
Whitman reference price, receive contingent right to receive
PLUS the right to receive payments if contingent payments
contingent payments if PepsiAmericas meets if PepsiAmericas
PepsiAmericas meets certain performance meets certain
certain performance levels levels for years 2000 performance levels
for years 2000 through through 2002 for years 2000
2002 through 2002
(We will refer to this as the "CONTINGENT PAYMENT CONSIDERATION.")
Each share of Whitman common stock issued as consideration in the merger will be accompanied by a
preferred stock purchase right, as more fully described under "Comparison of Shareholders
Rights--Rights Agreement."
WHITMAN REFERENCE PRICE = The average closing price of Whitman common stock for the 15 consecutive
trading days ending on the fifth trading day prior to the Whitman
shareholders meeting or the PepsiAmericas shareholders meeting,
whichever occurs first.
</TABLE>
The adjustments to the per share consideration illustrated in the table
above are designed to ensure that holders of PepsiAmericas common stock who
choose the cash or stock alternative will receive a value of $3.80 per share of
PepsiAmericas common stock (based on the Whitman reference price) so long as the
Whitman reference price is between $13.1513 and $16.0738 (commonly referred to
as a "COLLAR"). If the Whitman reference price is lower than $13.1513, a
shareholder choosing the cash or stock alternative will receive less than $3.80
in value (based on the Whitman reference price); if the Whitman reference price
is greater than $16.0738, a shareholder choosing the cash or stock alternative
will receive more than $3.80 in value (based on the Whitman reference price).
Similarly, the adjustments are designed to ensure that holders of PepsiAmericas
common stock who choose the contingent payment alternative will receive an
initial value of $2.80 plus the right to receive up to an additional nominal
value of $1.50 per share of PepsiAmericas common stock (based on the Whitman
reference price) so long as the Whitman reference price is within the collar.
See "--Contingent Payments," "--Target Performance Criteria" and
"--Determination of Contingent Payments" for more information regarding this
additional payment.
By way of illustration, the chart below describes the per share
consideration that a holder of PepsiAmericas common stock who elects the cash
alternative, the stock alternative or the contingent payment alternative will
receive upon consummation of the merger at varying Whitman reference prices,
assuming no proration. For purposes of this example, we assume that no
contingent payments will be made under the contingent payment alternative.
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VALUE OF CONSIDERATION AT VARYING WHITMAN REFERENCE PRICES
<TABLE>
<CAPTION>
CONTINGENT PAYMENT
STOCK ALTERNATIVE ALTERNATIVE
WHITMAN ------------------------- -------------------------
REFERENCE PRICE CASH ALTERNATIVE SHARES VALUE SHARES VALUE
--------------- ---------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 11.00 $3.18 0.2889 $3.18 0.2128 $2.34
$ 12.00 $3.47 0.2889 $3.47 0.2128 $2.55
$13.1513 $3.80 0.2889 $3.80 0.2128 $2.80
$ 14.00 $3.80 0.2714 $3.80 0.1999 $2.80
$ 15.00 $3.80 0.2533 $3.80 0.1866 $2.80
$16.0738 $3.80 0.2364 $3.80 0.1741 $2.80
$ 17.00 $4.02 0.2364 $4.02 0.1741 $2.96
$ 18.00 $4.26 0.2364 $4.26 0.1741 $3.13
</TABLE>
The merger agreement requires Dakota Holdings to elect the contingent
payment alternative in respect of each share of PepsiAmericas common stock that
it owns.
PRORATION IF TOO MUCH CASH CONSIDERATION IS ELECTED
The merger agreement specifies the aggregate number of shares of
PepsiAmericas common stock that may be converted in the merger into the right to
receive cash. For ease of reference, we refer to that number as the "CASH
ALTERNATIVE NUMBER." The cash alternative number is equal to the lesser of:
- 50% MULTIPLIED BY the total number of shares of PepsiAmericas common stock
outstanding immediately prior to the effective time of the merger, MINUS
the number of dissenting shares; and
- assuming for these purposes that no contingent payments will be made, the
number that would cause the following ratio to be less than 0.50:
- the aggregate value of shares of Whitman common stock to be issued as
consideration in the merger (based on the per share closing price of
Whitman common stock on the closing date of the merger); DIVIDED BY
- the aggregate value of all consideration to be issued in the merger,
calculated as the sum of:
1. the aggregate value of shares of Whitman common stock to be
issued as consideration in the merger based on the per share
closing price of Whitman common stock on the closing date of the
merger, PLUS
2. the aggregate cash consideration to be paid in the merger, PLUS
3. the number of dissenting shares MULTIPLIED BY $3.80 or the per
share cash consideration, whichever is greater, PLUS
4. any amounts paid by Whitman or PepsiAmericas (or their respective
affiliates) to, or on behalf of, any PepsiAmericas shareholder in
connection with the sale, redemption or disposition of any
PepsiAmericas capital stock in connection with the merger for
purposes of Treasury Regulation Sections 1.368-1(e) and
1.368-1T(e) PLUS
5. any extraordinary dividend distributed by PepsiAmericas prior to
and in connection with the merger for purposes of Treasury
Regulation Sections 1.368-1(e) and 1.368-1T(e).
If the number of shares of PepsiAmericas common stock in respect of which
the cash alternative has been elected exceeds the cash alternative number, then
the consideration paid to PepsiAmericas
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shareholders electing the cash alternative will be adjusted so that each share
of PepsiAmericas common stock in respect of which a cash alternative is elected
will be converted into the right to receive:
- an amount in cash (without interest), equal to the product of the per
share cash consideration MULTIPLIED BY a fraction (the "CASH FRACTION"),
the numerator of which is the cash alternative number, and the denominator
of which is the total number of shares of PepsiAmericas common stock in
respect of which the cash alternative has been elected; and
- a number of shares of Whitman common stock equal to the product of
(1) the exchange ratio MULTIPLIED BY (2) one MINUS the cash fraction.
ANTI-DILUTION ADJUSTMENTS TO THE MERGER CONSIDERATION
Appropriate and proportionate adjustments, if any, will be made to the
collar and to the exchange ratio used to determine the per share merger
consideration to which each holder of PepsiAmericas common stock will be
entitled upon conversion of such holder's shares in the event of any
reclassification, reorganization, recapitalization, stock combination, stock
split, stock dividend or other similar transaction with respect to the
outstanding shares of Whitman common stock or the payment of any extraordinary
dividend or distribution in respect of Whitman common stock (or if a record date
with respect to any of the foregoing should occur) after the date of the merger
agreement and prior to the effective time of the merger.
NO FRACTIONAL SHARES
Whitman will not issue any certificates or scrip representing a fractional
share of Whitman common stock in the merger. In lieu of any such fractional
share, each holder of PepsiAmericas common stock who would otherwise be entitled
to a fractional share will be paid an amount in cash (without interest) equal to
such holder's proportionate interest in the net proceeds from the sale or sales
in the open market by the exchange agent, on behalf of all such holders, of the
aggregate fractional shares of Whitman common stock which would otherwise be
issuable in connection with the merger.
ELECTION PROCEDURE
A holder of PepsiAmericas common stock who wishes to choose the cash
alternative, stock alternative or contingent payment alternative, or any
combination of the foregoing, with respect to such holder's shares must complete
a form of election, which we will send to shareholders of record on the
PepsiAmericas record date. For any such election to be valid, a properly
completed and signed form of election, accompanied by the stock certificates
representing the shares of PepsiAmericas common stock as to which the form of
election relates (or by an appropriate guarantee of delivery of such stock
certificates), must be received by the exchange agent no later than 5:00 p.m.,
New York time, on the election deadline. A holder of PepsiAmericas common stock
may revoke such holder's election by written notice received by the exchange
agent at or prior to the election deadline. Whitman will have the right, in its
sole discretion, to determine whether forms of election have been properly
completed, signed and submitted or revoked.
In the event that a holder of PepsiAmericas common stock fails to make a
valid election with respect to all or any portion of such holder's shares, such
holder will be treated as having chosen the stock alternative with respect to
those shares.
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EXCHANGE AGENT; PROCEDURES FOR EXCHANGE OF CERTIFICATES
Equiserve has been selected to act as exchange agent under the merger
agreement. Within five business days after the election deadline, the surviving
corporation will deposit with the exchange agent, in trust for the holders of
PepsiAmericas common stock:
- the aggregate cash consideration issuable at the effective time of the
merger in exchange for the outstanding shares of PepsiAmericas common
stock in respect of which the cash alternative has been elected; and
- certificates representing the total number of shares of Whitman common
stock issuable at the effective time of the merger in exchange for the
outstanding shares of PepsiAmericas common stock in respect of which the
stock alternative or the contingent payment alternative has been elected.
Upon surrender for cancellation to the exchange agent of all certificates
representing PepsiAmericas common stock held by any record holder, together with
a letter of transmittal duly executed, that holder shall be entitled to receive
in exchange therefor:
- a new certificate representing the number of whole shares of Whitman
common stock into which the shares of PepsiAmericas common stock
represented by the surrendered certificates shall have been converted at
the effective time of the merger if the stock alternative or the
contingent payment alternative are elected or the PepsiAmericas
shareholder does not make a valid election;
- the cash to which that holder is entitled under the provisions of the
merger agreement described above under "--Merger Consideration," if the
cash alternative is elected;
- any cash payable in lieu of fractional shares as described above under "No
Fractional Shares"; and
- the dividends and other distributions described in the second succeeding
paragraph.
As soon as reasonably practicable (but no later than 15 days) after the
election deadline, the exchange agent will mail to each record holder of
PepsiAmericas common stock who failed to make a valid election in respect of
that holder's shares:
1. A letter of transmittal specifying that delivery shall be effected and
risk of loss and title to the certificates representing PepsiAmericas
common stock shall pass only upon actual delivery of those certificates
to the exchange agent; and
2. Instructions for use in effecting the surrender of certificates in
exchange for shares of Whitman common stock.
Until surrendered as contemplated above, each certificate representing
PepsiAmericas common stock will be deemed, at and after the effective time of
the merger, to represent only the right to receive, upon such surrender, the
merger consideration described above. No interest will be paid or will accrue on
any cash payable to a holder of PepsiAmericas common stock by reason of the
merger.
Any dividend or other distribution paid in respect of Whitman common stock
to holders of record on or after the effective time of the merger and otherwise
payable to any holder of certificates representing PepsiAmericas common stock
entitled by reason of the merger to receive a new certificate representing
Whitman common stock shall be retained by Whitman until the surrender of such
certificates representing PepsiAmericas common stock, and no such dividend or
other distribution payable in respect of Whitman common stock shall be paid to
such holder until such certificates representing PepsiAmericas common stock
shall have been so surrendered to the exchange agent. Upon surrender of each
such certificate representing PepsiAmericas common stock, there shall be paid by
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Whitman to or at the direction of the holder thereof the amount of all dividends
and other distributions which became payable to holders of record on or after
the effective time of the merger in respect of the number of whole shares of
Whitman common stock represented by the new certificate so issued. In no event
shall any PepsiAmericas shareholder be entitled to receive interest on any cash
consideration or cash in lieu of fractional shares to be received in the merger
or on any such dividend or other distribution.
Whitman or the exchange agent will be entitled to deduct and withhold from
the consideration otherwise payable pursuant to the merger agreement amounts
that Whitman or the exchange agent is required to deduct and withhold with
respect to the making of such payment under the Internal Revenue Code of 1986,
as amended, the rules and regulations promulgated thereunder or any provision of
state, local or foreign tax law.
TREATMENT OF PEPSIAMERICAS STOCK OPTIONS AND WARRANTS
By virtue of the merger, each option to purchase shares of PepsiAmericas
common stock outstanding immediately prior to the effective time of the merger
will be converted into an option to purchase that number of shares of Whitman
common stock equal to the number of shares of PepsiAmericas common stock which
could have been purchased upon exercise of the option immediately prior to the
effective time of the merger MULTIPLIED BY the exchange ratio, at an exercise
price per share equal to the exercise price per share of such option immediately
prior to the effective time of the merger DIVIDED BY the exchange ratio, rounded
down to the nearest whole cent. If the foregoing calculation results in an
option being exercisable for a fractional share of Whitman common stock, then
the number of shares of Whitman common stock subject to such option will be
rounded up to the nearest whole number of shares. The other terms and conditions
of such options will continue to apply in accordance with the plans under which
they were originally issued.
Similarly, by virtue of the merger, each warrant to purchase shares of
PepsiAmericas common stock outstanding immediately prior to the effective time
of the merger will be converted into a warrant to purchase that number of shares
of Whitman common stock equal to the number of shares of PepsiAmericas common
stock which could have been purchased upon exercise of the warrant immediately
prior to the effective time of the merger MULTIPLIED BY the exchange ratio, at
an exercise price per share equal to the exercise price per share of such
warrant immediately prior to the effective time of the merger DIVIDED BY the
exchange ratio, rounded down to the nearest whole cent. If the foregoing
calculation results in a warrant being exercisable for a fractional share of
Whitman common stock, then the number of shares of Whitman common stock subject
to such warrant will be rounded up to the nearest whole number of shares. The
other terms and conditions of such warrants will continue to apply in accordance
with the agreements under which they were originally issued.
CONTINGENT PAYMENTS
Each record holder of PepsiAmericas common stock who validly elects the
contingent payment alternative will be entitled to receive additional shares of
Whitman common stock in 2002 and 2003 if PepsiAmericas meets certain performance
levels for each of fiscal years 2001 and 2002 and for the three-year period
beginning January 2, 2000 (each, a "MEASUREMENT PERIOD"). For ease of reference,
we will refer to those additional shares of Whitman common stock as "CONTINGENT
PAYMENTS" and to those record holders who will be entitled to receive such
contingent payments as "CONTINGENT PAYMENT RECORD HOLDERS."
TARGET PERFORMANCE CRITERIA
The performance levels are based upon the adjusted EBITDA achieved by
PepsiAmericas during each measurement period. For purposes of the merger
agreement, "ADJUSTED EBITDA" means, with
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respect to any period, the earnings before interest, taxes, depreciation and
amortization of PepsiAmericas for that period, calculated in accordance with
past practice of PepsiAmericas and excluding:
- any earnings derived from acquisitions made by PepsiAmericas after the
date of the merger agreement;
- any costs savings or increased costs which result from the merger; and
- any costs or expenses incurred by PepsiAmericas in connection with the
merger, including, for example, attorneys' and investment bankers' fees
and expenses, due diligence costs or fees and expenses associated with the
printing, filing and mailing of this proxy statement/prospectus and the
registration statement of which this proxy statement/prospectus is a part.
The merger agreement provides that there will also be deducted from the
calculation of adjusted EBITDA for the applicable period (unless the Affiliated
Transaction Committee of Whitman's board of directors determines otherwise) any
capital expenditures by PepsiAmericas and any aggregate PepsiCo spend-back
amounts, in each case, in excess of certain specified amounts for such period.
PepsiCo spend-back amounts are amounts paid by PepsiCo, using their sole
discretion as to amount and timing of payments, for the distribution of PepsiCo
products.
For each measurement period, the merger agreement establishes a target for
adjusted EBITDA and the per share contingent payment payable to the contingent
payment record holders upon the achievement of performance levels relating to
such target as follows:
<TABLE>
<CAPTION>
PERFORMANCE LEVEL
MEASUREMENT PERIOD (90% OF TARGET EBITDA) PER SHARE CONTINGENT PAYMENT
--------------------- ------------------------------- ---------------------------------------
<S> <C> <C>
Fiscal Year 2001 Adjusted EBITDA for fiscal year The number of shares of Whitman common
2001 PLUS the amount of any stock equal to the contingent payment
excess (not to exceed $4.4 alternative exchange ratio MULTIPLIED
million) of adjusted EBITDA for BY the lesser of (1) one or (2) a
fiscal year 2000 over $65.6 fraction, the numerator of which is the
million ("2001 ADJUSTED amount by which 2001 adjusted EBITDA
EBITDA") must be greater than exceeds $68.9 million, and the
$68.9 million denominator of which is $7.7 million
Fiscal Year 2002 Adjusted EBITDA for fiscal year The number of shares of Whitman common
2002 ("2002 ADJUSTED EBITDA") stock equal to the contingent payment
must be greater than $84 alternative exchange ratio MULTIPLIED
million BY the lesser of (1) one or (2) a
fraction, the numerator of which is the
amount by which 2002 adjusted EBITDA
exceeds $84 million, and the
denominator of which is $9.3 million
Three-Year Period The sum of adjusted EBITDA for The number of shares of Whitman common
beginning January 2, fiscal years 2000 through 2002 stock equal to the contingent payment
2000 ("AGGREGATE ADJUSTED EBITDA") alternative exchange ratio MULTIPLIED
must be greater than $235.5 BY the lesser of (1) one or (2) a
million fraction, the numerator of which is the
amount by which aggregate adjusted
EBITDA exceeds $235.5 million, and the
denominator of which is $11.8 million
CONTINGENT PAYMENT ALTERNATIVE EXCHANGE RATIO = The exchange ratio MULTIPLIED BY 0.1316.
</TABLE>
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For example, assuming that the Whitman reference price is $14.00, resulting
in an exchange ratio of 0.2714 and a contingent payment exchange ratio of
0.0357:
- With respect to fiscal year 2001:
If 2001 adjusted EBITDA is less than or equal to $68.9 million (90% of
target EBITDA), no contingent payments for that measurement period will
be made; if 2001 adjusted EBITDA is greater than or equal to
$76.6 million (100% of target EBITDA), contingent payment record holders
will receive the maximum per share contingent payment (or 0.0357 shares
of Whitman common stock); if 2001 adjusted EBITDA falls between
$68.9 million and $76.6 million, contingent payment record holders will
receive a ratable portion of 0.0357 shares of Whitman common stock based
on the amount by which 2001 adjusted EBITDA exceeds $68.9 million.
- With respect to fiscal year 2002:
If 2002 adjusted EBITDA is less than or equal to $84 million (90% of
target EBITDA), no contingent payments for that measurement period will
be made; if 2002 adjusted EBITDA is greater than or equal to
$93.3 million (100% of target EBITDA), contingent payment record holders
will receive the maximum per share contingent payment (or 0.0357 shares
of Whitman common stock); if 2002 adjusted EBITDA falls between
$84 million and $93.3 million, contingent payment record holders will
receive a ratable portion of 0.0357 shares of Whitman common stock based
on the amount by which 2002 adjusted EBITDA exceeds $84 million.
- With respect to the three-year period beginning January 2, 2000 through
fiscal year 2002:
If aggregate adjusted EBITDA is less than or equal to $235.5 million
(100% of target EBITDA), no contingent payments for that measurement
period will be made; if aggregate adjusted EBITDA is greater than or
equal to $247.3 million (105% of target EBITDA), contingent payment
record holders will receive the maximum per share contingent payment (or
0.0357 shares of Whitman common stock); if aggregate adjusted EBITDA
falls between $235.5 million and $247.3 million, contingent payment
record holders will receive a ratable portion of 0.0357 shares of Whitman
common stock based on the amount by which aggregate adjusted EBITDA
exceeds $235.5 million.
Under these assumptions, contingent payment record holders potentially could
receive up to an aggregate of 0.1071 additional shares of Whitman common stock
for each share of PepsiAmericas common stock in respect of which the contingent
payment alternative is elected.
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The foregoing examples are for illustrative purposes only. No assurance can
be given as to whether and to what extent any contingent payments will be made.
The amount of the contingent payments, if any, will depend on PepsiAmericas'
actual results of operations over the three-year period beginning January 2,
2000. However, the maximum per share contingent payments that a PepsiAmericas
shareholder could receive under any circumstances will be 0.1140 additional
shares of Whitman common stock.
DETERMINATION OF CONTINGENT PAYMENTS
The merger agreement requires that, after the end of each measurement
period, Whitman's independent auditors determine the adjusted EBITDA for the
period and, within 30 days following the completion of Whitman's annual year-end
audit, deliver a report to the Affiliated Transaction Committee of Whitman's
board of directors (with a copy to Robert C. Pohlad on behalf of the contingent
payment record holders) setting forth that determination. The Affiliated
Transaction Committee will have the right to review that report, together with
any written objections from Robert C. Pohlad, and will determine whether it
finds the report to be reasonable. If the Affiliated Transaction Committee
objects to the independent auditor's determination with respect to adjusted
EBITDA for any measurement period and the two parties are unable to resolve the
objections, the matters in dispute will be submitted to another nationally
recognized independent accounting firm selected by the Affiliated Transaction
Committee for resolution. The determinations set forth in the independent
auditor's report, as adjusted by any agreements between the parties and by the
accounting firm's resolution of the unresolved objections, if any, will be final
and binding on Whitman and each of the contingent payment record holders.
DELIVERY OF CONTINGENT PAYMENTS
With respect to each measurement period, on the date (the "CONTINGENT SHARE
DELIVERY DATE") which is the later of (1) 90 days following the end of such
measurement period and (2) 10 days following the date on which the independent
auditor's report becomes final and binding, each contingent payment record
holder will become entitled to receive such per share contingent payment, if
any, indicated by the table above. On each contingent share delivery date, or as
soon as practicable thereafter, Whitman will deposit with the exchange agent, in
trust for the contingent payment record holders, certificates representing the
total contingent payments, if any, to be paid on that contingent share delivery
date. The exchange agent will promptly deliver any such certificates payable to
the contingent payment record holders at their respective addresses as they
appeared on the stock records of Whitman at the effective time of the merger or
at such other addresses as the contingent payment record holders provide to the
exchange agent by written notice.
No fractional shares of Whitman common stock will be issued or delivered in
respect of the issuance of contingent payments. In lieu of any such fractional
shares, each contingent payment record holder who would otherwise be entitled to
receive a fractional share will be paid an amount in cash (without interest)
equal to such fractional share MULTIPLIED BY the per share closing price of
Whitman common stock on the contingent share delivery date.
Unless and until certificates representing the contingent payments have been
delivered to the exchange agent for the benefit of the contingent payment record
holders, no dividends payable to holders of record of shares of Whitman common
stock will be paid to the contingent payment record holders with respect to any
contingent payments. Whitman has agreed that it will not declare any dividends
in respect of shares of Whitman common stock having a record date after a
contingent share earned date but prior to the date on which certificates
representing contingent payments are delivered to the exchange agent as
described above.
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Each contingent payment record holder by electing the contingent payment
alternative, authorizes the Affiliated Transaction Committee to act as its agent
in determining the amount of the contingent payments.
The right of each contingent payment record holder to receive additional
shares of Whitman common stock pursuant to the provisions of the merger
agreement described under the section "CONTINGENT PAYMENTS" may not be assigned
or transferred in any manner whatsoever, except by operation of law or by will.
In no event will any right to contingent payments be evidenced by negotiable
certificates of any kind.
Appropriate and proportionate adjustments, if any, will be made in
calculating the contingent payments to be paid to the contingent payment record
holders in the event of any reclassification, reorganization, recapitalization,
stock combination, stock split, stock dividend or other similar transaction with
respect to the outstanding shares of Whitman common stock or the payment of any
extraordinary dividend or distribution in respect of Whitman common stock (or if
a record date with respect to any of the foregoing should occur after the
effective time of the merger but prior to a contingent share earned date).
OPTION TO PURCHASE ADDITIONAL WHITMAN COMMON STOCK
In addition to the right to receive the contingent payments described above,
the contingent payment record holders will have the right to purchase from
Whitman, shortly after the closing date of the merger an aggregate of up to an
additional 1,710,863 shares (the "SUBSCRIPTION SHARES") of Whitman common stock
at a price per share equal to $14.6125. Each contingent payment record holder
will be entitled to purchase up to that number of subscription shares, rounded
down to the nearest whole share, equal to:
- the number of shares of PepsiAmericas common stock in respect of which
such contingent payment record holder has chosen the contingent payment
alternative
MULTIPLIED BY
- 1,710,863 DIVIDED BY the aggregate number of shares of PepsiAmericas
common stock in respect of which the contingent payment alternative
applies.
Within five business days after the election deadline, the exchange agent will
notify Dakota Holdings of the number of subscription shares, if any, not
purchased by the contingent payment record holders, and within 10 days after
delivery of that notice, Dakota Holdings will be entitled to purchase such
shares at a price per share equal to $14.6125.
The form of election, copies of which we will send to shareholders of record
on the PepsiAmericas record date, allows each holder of PepsiAmericas common
stock who validly chooses the contingent payment alternative to designate
whether, and to what extent, such holder desires to purchase subscription
shares. We encourage you to review carefully the form of election and the letter
of transmittal for additional instructions on exercising this option and
effecting payment for the subscription shares.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains various representations and warranties made by
PepsiAmericas, on the one hand, and Whitman and Anchor Merger Sub, on the other
hand. The most significant of these relate to:
- due organization, corporate existence and good standing;
- ownership of subsidiaries;
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- capitalization;
- authorization, execution, delivery, performance and enforceability of the
merger agreement and the transactions contemplated thereby;
- absence of any breach of organizational documents, law or certain material
agreements as a result of, and governmental approvals required in
connection with, the contemplated transaction;
- filings with the SEC and financial statements;
- absence of certain material changes or events;
- absence of undisclosed liabilities;
- employee benefits plans and labor matters;
- material contracts and commitments and the absence of any breach or
default under any such contracts;
- absence of certain litigation;
- compliance with applicable law and possession of all licenses, permits,
approvals and other authorizations relating to the conduct of business;
- taxes;
- environmental matters;
- ownership of intellectual property rights;
- matters related to owned or leased real property (and any insurance
relating to such property);
- the shareholder vote required to approve the contemplated transaction;
- broker's fees; and
- opinions of financial advisors.
The representations and warranties in the merger agreement will expire at
the effective time of the merger.
PRINCIPAL COVENANTS
Each of PepsiAmericas and Whitman has undertaken certain covenants in the
merger agreement. The following summarizes the more significant of these
covenants.
INTERIM BUSINESS OPERATIONS
The merger agreement obligates PepsiAmericas and its subsidiaries, on the
one hand, and Whitman and its subsidiaries, on the other hand, from the date of
the merger agreement until the effective time of the merger, to conduct their
businesses in the ordinary course consistent with past practice, to use all
reasonable efforts to preserve intact their business organizations, to keep
available the services of their officers and key employees and to preserve their
relationships with customers, suppliers and others with which they have business
dealings. The merger agreement also contains specific restrictive covenants as
to certain activities of PepsiAmericas and its subsidiaries, on the one hand,
and Whitman and its subsidiaries, on the other hand, prior to the effective time
of the merger without the prior written consent of the other party or except as
expressly contemplated by the merger agreement relating to, among other things:
- dividends or other distributions, changes in stock and repurchases or
redemptions of securities;
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- issuances or sales of their securities;
- amendments to their respective organizational documents;
- liquidation, dissolution, merger, restructuring, reorganization or other
change of control transactions;
- material acquisitions or dispositions;
- indebtedness, loans and investments in excess of certain levels;
- filings with governmental entities;
- material contracts;
- agreements with affiliates;
- employee matters;
- changes in accounting policies, procedures and practices other than in the
ordinary course of business consistent with past practices; and
- certain other material events or transactions.
In addition, PepsiAmericas and its subsidiaries are also restricted from
engaging in certain activities relating to the following:
- tax elections and filing of material tax returns;
- capital expenditures in excess of certain levels;
- discharge of liabilities other than in the ordinary course of business
consistent with past practices; and
- settlement of material litigation and claims.
NO SOLICITATION
The merger agreement requires PepsiAmericas and Whitman to immediately cease
and terminate all existing discussions or negotiations with any persons with
respect to, or that could reasonably be expected to lead to, any takeover
proposal (as defined below). In addition, each of PepsiAmericas and Whitman has
agreed that, from the date of the merger agreement until the effective time of
the merger, it and its subsidiaries and its and their respective affiliates,
officers, directors, employees, authorized representatives and authorized agents
will not:
- solicit, initiate or encourage the submission of any takeover proposal;
- enter into any contract with respect to a takeover proposal; or
- participate in any discussions or negotiations regarding, or furnish to
any person any information with respect to, or take any other action to
facilitate any inquiries or the making of a proposal that constitutes or
could reasonably be expected to lead to, a takeover proposal.
Each of PepsiAmericas and Whitman is required to immediately advise the
other party orally and in writing of any takeover proposal, any request for
information concerning any takeover proposal, the material terms and conditions
of such request or takeover proposal and the identity of the person making such
request or takeover proposal. For purposes of the merger agreement, "TAKEOVER
PROPOSAL" means any proposal for a merger, consolidation, share exchange,
business combination or other similar transaction involving PepsiAmericas or
Whitman, as the case may be, or any proposal or offer to acquire, directly or
indirectly, 20% or more of the voting securities or equity interests of, or 20%
or
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more in value of the assets (on a consolidated basis) of, PepsiAmericas or
Whitman, as the case may be, other than the transactions contemplated by the
merger agreement.
Notwithstanding the restrictions above, each of PepsiAmericas and Whitman is
permitted, under the merger agreement, to furnish information concerning its
business, properties or assets to any person in response to a request for such
information made after the date of the merger agreement, to participate in
discussions and negotiations with such person concerning a takeover proposal,
and, subject to its obligation to call and hold a shareholders meeting to vote
on the merger, to recommend a superior proposal to its shareholders, in each
case, if and only to the extent that:
- such request or takeover proposal was not solicited, initiated or
encouraged, directly or indirectly, by PepsiAmericas or Whitman, as the
case may be, or its subsidiaries or its or their respective affiliates,
officers, directors, employees, authorized representatives or authorized
agents;
- the board of directors of PepsiAmericas or Whitman, as the case may be,
has determined in good faith, after consultation with its outside legal
counsel, that its fiduciary obligations to its shareholders under
applicable law requires such action; and
- such person has entered into a customary confidentiality agreement with
PepsiAmericas or Whitman, as the case may be.
In addition, pursuant to the merger agreement, neither the board of
directors of PepsiAmericas or Whitman, as the case may be, nor any committee of
such board may, except as provided for below:
- withdraw or modify, in a manner adverse to the other party, its approval
or recommendation of the merger agreement, the merger or the issuance of
shares of Whitman common stock in the merger, except under the
circumstances described below;
- approve or recommend any takeover proposal; or
- cause PepsiAmericas or Whitman, as the case may be, to enter into a letter
of intent, agreement in principle or other similar agreement related to a
takeover proposal.
The board of directors of PepsiAmericas or Whitman, as the case may be, may
withdraw or modify its approval or recommendation of the merger agreement, the
merger or the issuance of shares of Whitman common stock in the merger if and
only to the extent that the board determines that a superior proposal exists and
determines, in its good faith judgment based on the advice of outside legal
counsel, that a modification or withdrawal of its recommendation or approval is
required by its fiduciary obligations to its shareholders under applicable law.
For purposes of the merger agreement, "SUPERIOR PROPOSAL" means any bona fide
written proposal or offer to acquire, directly or indirectly, for consideration
consisting of cash and/or securities, more than 50% of the voting power of
voting securities or equity interests of, or all or substantially all of the
assets (on a consolidated basis) of, PepsiAmericas or Whitman, as the case may
be:
- on terms which the board of directors of PepsiAmericas or Whitman, as the
case may be, determines in its good faith judgment, after consultation
with a nationally recognized financial advisor, to be more favorable to
PepsiAmericas or Whitman, as the case may be, and its shareholders than
the merger; and
- for which financing, to the extent required, is then fully committed or
which the board of directors of PepsiAmericas or Whitman, as the case may
be, determines in its good faith judgment, based on the advice of a
nationally recognized financial advisor, is reasonably capable of being
financed.
PepsiAmericas has agreed to hold the PepsiAmericas shareholder meeting and
to submit the merger agreement and the merger to its shareholders for approval,
regardless of the recommendation
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or any change in the recommendation of its board of directors. Likewise, Whitman
has agreed to hold the Whitman shareholder meeting and to submit the issuance of
shares of Whitman common stock in the merger to its shareholders for approval,
regardless of the recommendation or any change in the recommendation of its
board of directors.
THIRD PARTY STANDSTILL AGREEMENTS
Each of PepsiAmericas and Whitman has agreed that, until the effective time
of the merger or earlier termination of the merger agreement, it will not
terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which it or any of its subsidiaries is a party. During
such period, each of PepsiAmericas and Whitman will enforce, to the fullest
extent permitted under applicable law, the provisions of any such agreements,
including obtaining injunctions to prevent any breaches of such agreements and
to enforce specifically the terms and provisions thereof in any court of the
United States or any state thereof having jurisdiction.
BOARD OF DIRECTORS AND CHIEF EXECUTIVE OFFICER OF WHITMAN
Whitman has agreed that Robert C. Pohlad will become a director of Whitman
at the effective time of the merger. In addition, as of the effective time of
the merger, the board of directors will elect Robert C. Pohlad as Chief
Executive Officer of Whitman.
AMENDMENT TO WHITMAN BYLAWS AND PEPSICO SHAREHOLDER AGREEMENT; POHLAD COMPANIES
SHAREHOLDER AGREEMENT
Pursuant to the merger agreement, at or prior to the effective time of the
merger, Whitman will amend its bylaws in order to:
- restrict from serving as a member of the Affiliated Transaction Committee
of the board of directors of Whitman, until the expiration of Whitman's
obligations to make contingent payments in accordance with the terms of
the merger agreement, any of the following persons:
1. Robert C. Pohlad;
2. any person who is or within the previous two years has been an
affiliate of Mr. Pohlad (including any member of Mr. Pohlad's
family);
3. any person who is or within the previous two years has been an
affiliate, director, officer, employee, consultant or advisor of
Pohlad Companies; and
4. any person who within the two years prior to the closing of the
merger has been an affiliate, director, officer, employee, consultant
or advisor of PepsiAmericas; and
- separate the powers and duties assigned to the positions of Chairman of
the board of directors and Chief Executive Officer of Whitman.
In addition, Whitman has agreed to amend its existing shareholder agreement
with PepsiCo to provide that:
- PepsiCo, Pohlad Companies and their respective affiliates shall have no
agreements or understandings, other than with regard to Dakota Holdings,
with respect to the holding, voting, acquisition or disposition of any
shares of Whitman common stock owned by PepsiCo, Pohlad Companies or their
respective affiliates; and
- the combined beneficial ownership of Whitman common stock by PepsiCo,
Pohlad Companies and their respective affiliates shall not, at any time,
exceed 49.9% of the then outstanding shares of Whitman common stock,
subject to certain exceptions.
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Whitman has also agreed to enter into a shareholder agreement with Pohlad
Companies, similar to its agreement with PepsiCo, to provide that the beneficial
ownership of Whitman common stock (as a percentage of the then outstanding
shares of Whitman common stock) by Pohlad Companies and its affiliates shall
not, at any time, exceed the percentage of the outstanding shares of Whitman
common stock owned by Pohlad Companies and its affiliates on a fully diluted
basis as of the closing date of the merger, except as otherwise agreed by the
Affiliated Transaction Committee of Whitman's board of directors and as provided
for by the merger agreement (including contingent payments, purchase of
subscription shares, coversion of options and purchases of shares from PepsiCo).
For a more detailed description of these documents, please see the sections
entitled "The Voting Agreements" and "Comparison of Shareholder Rights." We also
encourage you to read carefully the form of Whitman's amended and restated
bylaws, as amended in the manner described above, the form of amended and
restated shareholder agreement with PepsiCo and the form of the shareholder
agreement with Pohlad Companies, which we have attached as Annexes F, G and H,
respectively, to this joint proxy statement/prospectus.
REDEMPTION OF DELTA BEVERAGE GROUP SERIES AA PREFERRED STOCK
Pursuant to the merger agreement, at or prior to the effective time of the
merger, PepsiAmericas shall cause all of the outstanding shares of Series AA
Preferred Stock of Delta Beverage Group, Inc., a subsidiary of PepsiAmericas, to
be redeemed and retired. In connection with the redemption, Whitman has agreed
either to provide the funds required to pay the holders of such shares in
exchange therefor or to reimburse PepsiAmericas for making such payments.
PAYMENT OF DIVIDENDS ON WHITMAN COMMON STOCK
Whitman has agreed that it will not declare any dividends in respect of
shares of Whitman common stock having a record date after a contingent share
earned date but prior to the date on which certificates representing contingent
payments are delivered to the exchange agent as described under "Contingent
Payments."
REASONABLE BEST EFFORTS
Each of PepsiAmericas, Whitman and Anchor Merger Sub have agreed to use its
reasonable best efforts to take, or cause to be taken, all actions necessary to
comply promptly with all legal requirements that may be imposed on it with
respect to the merger, including furnishing all information required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and in connection with
approvals of or filings with any other governmental entity, to promptly
cooperate with and furnish information to each other in connection with any such
requirements and to use its reasonable best efforts to take all actions
necessary to obtain any consent, authorization, order or approval of, or any
exemption by, any governmental entity or other public or private third party
required to be obtained or made by PepsiAmericas, Whitman or any of their
subsidiaries in connection with the merger. Notwithstanding the foregoing,
neither PepsiAmericas not Whitman will be required to agree to waive any
substantial rights or to accept any substantial limitation on its operations or
to dispose of any material assets in connection with obtaining any such consent,
authorization, order, approval or exemption.
LISTING OF WHITMAN COMMON STOCK
Whitman has agreed to use its reasonable best efforts to cause the shares of
Whitman common stock to be issued in the merger or otherwise pursuant to the
merger agreement, including shares issuable upon the exercise of options and
warrants which are converted in the merger, shares issuable as contingent
payments and shares purchased by the contingent payment record holders, to be
listed for
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trading on the NYSE and on the Chicago and Pacific Stock Exchanges, subject to
official notice of issuance.
PUBLIC ANNOUNCEMENTS
For so long as the merger agreement is in effect, PepsiAmericas and Whitman
have agreed to consult with each other before issuing any press release or
making any other statements intended for general public dissemination with
respect to the merger agreement or the transactions contemplated thereby, and
each has agreed not to issue any such press release or make any such other
statement without the prior written consent of the other party, not to be
unreasonably withheld, except as may be required by law or in accordance with
any listing agreement with any national securities exchange.
CERTAIN LITIGATION
Each of PepsiAmericas and Whitman has agreed that it will not settle any
litigation commenced after the date of the merger agreement against
PepsiAmericas or Whitman, as the case may be, or any of its directors by any
shareholder of PepsiAmericas or Whitman relating to the merger, the merger
agreement or the voting agreements, without the prior written consent of the
other party. Neither PepsiAmericas nor Whitman will voluntarily cooperate with
any third party that may seek to restrain or prohibit or otherwise oppose the
merger, and each of them will cooperate with the other party to resist any such
effort to restrain or prohibit or otherwise oppose the merger.
EMPLOYEE BENEFITS MATTERS
Under the terms of the merger agreement, for a period of one year following
the effective time of the merger, Whitman will provide coverage and benefits to
employees and former employees of PepsiAmericas and its subsidiaries that are no
less favorable, in the aggregate, than those provided to such employees
immediately prior to the effective time of the merger, but neither Whitman,
PepsiAmericas nor Anchor Merger Sub is obligated to continue any particular
benefit plan or incentive plan. The merger agreement also specifies the
treatment of pre-existing conditions, deductibles and service credit with
respect to employees and former employees of PepsiAmericas and its subsidiaries
who participate in any employee benefit plans of Whitman following the effective
time of the merger. In addition, Whitman has agreed to assume, honor and
perform, in accordance with their terms, all employment, severance and other
such agreements of PepsiAmericas and its subsidiaries and affiliates.
INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE
Whitman has agreed that, after the effective time of the merger, it will, or
will cause the surviving corporation to, indemnify, defend and hold harmless
each present and former director and officer of PepsiAmericas and each
subsidiary of PepsiAmericas and each such individual who served at their request
as a director, officer, trustee, partner, fiduciary, employee or agent of
another corporation, partnership, joint venture, trust, pension or other
employee benefit plan or enterprise against all losses, costs, obligations,
liabilities, settlement payments, awards, judgments, fines, penalties, damages,
expenses, monetary deficiencies and other charges (including reasonable
attorneys' fees and expenses) in connection with any claim, action, suit,
proceeding or investigation, whether civil, administrative or investigative,
based on or arising out of:
- the fact that such person is or was a director or officer of PepsiAmericas
or any subsidiary of PepsiAmericas or is or was serving at their request
as a director, officer, trustee, partner, fiduciary, employee or agent of
another corporation, partnership, joint venture, trust, pension or other
employee benefit plan or enterprise; or
- the merger agreement or the transactions contemplated thereby;
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in each case, to the extent that any such claim, action, suit or proceeding
pertains to any matter or fact arising, existing or occurring at or prior to the
effective time of the merger, regardless of whether such claim, action, suit or
proceeding is asserted or claimed prior to, at or after the effective time of
the merger, to the full extent permitted under applicable law or the charter or
bylaws of PepsiAmericas or its subsidiaries, as the case may be, in effect at
the date of the merger agreement, including provisions relating to the
advancement of expenses incurred in the defense of any such claim, action, suit
or proceeding. However, neither Whitman nor the surviving corporation is
required to indemnify any person identified above in connection with any
proceeding involving any claim initiated by such person unless the initiation of
such proceeding was authorized by the Whitman board of directors or unless such
proceeding is brought to enforce rights to indemnification under the merger
agreement.
Whitman and PepsiAmericas have also agreed that all rights to
indemnification, and all limitations of liability with respect thereto, existing
in favor of any person identified above, as provided in the charter or bylaws of
PepsiAmericas or its subsidiaries, as the case may be, in effect at the date of
the merger agreement, will survive the merger and will continue in effect,
without any amendment thereto, for a period of six years following the effective
time of the merger (or, if any claim is made within such six-year period, until
the disposition thereof) to the extent such rights and limitations are
consistent with applicable law. Any determination required to be made with
respect to whether such person's conduct complies with the standards set forth
under applicable law or the charter or bylaws of PepsiAmericas or its
subsidiaries, as the case may be, shall be made by independent legal counsel
selected by such person and reasonably acceptable to Whitman.
The merger agreement also requires Whitman or the surviving corporation to
maintain PepsiAmericas' existing directors' and officers' liability insurance
policies (or to substitute therefor policies of similar coverage and amounts
containing terms no less advantageous to such former directors and officers) for
a period of not less than six years following the effective time of the merger,
and if such insurance expires or is canceled during such six-year period,
Whitman or the surviving corporation must use all reasonable efforts to obtain
similar insurance. However, in no event will Whitman or the surviving
corporation be required to pay an annual premium in excess of 200% of the last
annual premium paid by PepsiAmericas prior to the date of the merger agreement
to maintain or procure such insurance coverage. If such premium limitation
becomes applicable, Whitman or the surviving corporation is required to purchase
as much coverage as possible for such amount.
CERTAIN OTHER COVENANTS
The merger agreement contains certain other mutual covenants of
PepsiAmericas and Whitman, the most significant of which are that PepsiAmericas
and Whitman agree:
- to promptly notify the other party of:
1. any notice or other communication from governmental entity regarding
the transactions contemplated by the merger agreement;
2. any notice from any person alleging that the consent of such person
is required to complete the merger;
3. the occurrence or non-occurrence of any event which would reasonably
be expected to cause any representation or warranty contained in the
merger agreement to be untrue or inaccurate in any material respect;
and
4. any failure to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it under the merger
agreement;
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- to use its reasonable best efforts to cause the merger to qualify as a
reorganization within the meaning of Section 368 of the Internal Revenue
Code and to not knowingly take any action that would cause the merger not
to so qualify; and
- to provide to the other party and its officers, directors, employees,
counsel and other representatives reasonable access to its own books,
properties and records and to furnish promptly such financial and other
information as reasonably requested.
CONDITIONS TO COMPLETION OF THE MERGER
The respective obligations of Whitman, Anchor Merger Sub and PepsiAmericas
to effect the merger are subject to the satisfaction, prior to the date of the
closing of the merger, of each of the following conditions:
- the adoption of the merger agreement by the requisite vote of the holders
of PepsiAmericas common stock;
- the approval of the issuance of shares of Whitman common stock in the
merger by the requisite vote of the holders of Whitman common stock;
- the expiration or termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976;
- the absence of any legal restraint or prohibition preventing the
consummation of the merger;
- the effectiveness of the registration statement, which includes this proxy
statement/prospectus, the absence of any stop order suspending such
effectiveness or any action, suit, proceeding or investigation by the SEC
to suspend such effectiveness and the receipt of all necessary state
securities laws approvals;
- the approval for listing on the NYSE and on the Chicago and Pacific Stock
Exchanges of the shares of Whitman common stock to be issued in the merger
or otherwise pursuant to the merger agreement; and
- the receipt or making of all other required consents, approvals,
authorizations, exemptions and filings, unless the failure to obtain or
make the same would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on PepsiAmericas or Whitman.
Pursuant to the merger agreement, PepsiAmericas' obligation to effect the
merger is subject to the satisfaction, on or prior to the date of the closing of
the merger, of each of the following additional conditions:
- the performance by Whitman and Anchor Merger Sub in all material respects
of each of their agreements contained in the merger agreement required to
be performed at or prior to the effective time of the merger;
- the accuracy, as of the effective time of the merger, of the
representations and warranties of Whitman and Anchor Merger Sub to the
extent specified in the merger agreement;
- the receipt of a certificate signed on behalf of Whitman by an executive
officer of Whitman, certifying to the effect that the condition described
in the previous bullet point has been satisfied in full;
- the receipt of an opinion of Briggs and Morgan, P.A., in form and
substance reasonably satisfactory to PepsiAmericas, dated the effective
time of the merger, to the effect that the merger will be treated for
federal income tax purposes as a reorganization within the meaning of
Section 368 of the Internal Revenue Code and that each of Whitman, Anchor
Merger Sub and
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PepsiAmericas will be a party to the reorganization within the meaning of
Section 368 of the Internal Revenue Code; and
- the receipt of a certificate signed by the corporate secretary of Whitman,
certifying to Whitman's charter and bylaws, the resolutions of Whitman's
board of directors and shareholders relating to the approval of the merger
agreement and the transactions contemplated thereby and the incumbency and
signature of each officer of Whitman executing the merger agreement or any
other document or instrument contemplated thereby.
Pursuant to the merger agreement, Whitman's and Anchor Merger Sub's
obligations to effect the merger are subject to the satisfaction, on or prior to
the date of the closing of the merger, of each of the following additional
conditions:
- the performance by PepsiAmericas in all material respects of each of its
agreements contained in the merger agreement required to be performed at
or prior to the effective time of the merger;
- the accuracy, as of the effective time of the merger, of the
representations and warranties of PepsiAmericas to the extent specified in
the merger agreement;
- the receipt of a certificate signed on behalf of PepsiAmericas by an
executive officer of PepsiAmericas, certifying to the effect that the
condition described in the previous bullet point has been satisfied in
full;
- the receipt of an opinion of Sidley & Austin, in form and substance
reasonably satisfactory to Whitman, dated the effective time of the
merger, to the effect that the merger will be treated for federal income
tax purposes as a reorganization within the meaning of Section 368 of the
Internal Revenue Code and that each of Whitman, Anchor Merger Sub and
PepsiAmericas will be a party to the reorganization within the meaning of
Section 368 of the Internal Revenue Code;
- the execution by Whitman and PepsiCo of the Amended and Restated
Shareholder Agreement, the adoption of the amendment to Whitman's bylaws
and the execution by Whitman and Pohlad Companies of the Shareholder
Agreement (each as described under "--Principal Covenants");
- the redemption of all outstanding shares of Series AA Preferred Stock of
Delta Beverage Group; and
- the receipt of a certificate signed by the corporate secretary of
PepsiAmericas, certifying to PepsiAmericas' charter and bylaws, the
resolutions of PepsiAmericas' board of directors and shareholders relating
to the approval of the merger agreement and the transactions contemplated
thereby and the incumbency and signature of each officer of PepsiAmericas
executing the merger agreement or any other document or instrument
contemplated thereby.
TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated at any time prior to the effective
time of the merger, whether before or after the approval by the shareholders of
PepsiAmericas of the merger agreement and the merger or the approval by the
shareholders of Whitman of the issuance of shares of Whitman common stock in the
merger or otherwise pursuant to the merger agreement:
- by mutual written consent of Whitman and PepsiAmericas;
- by either Whitman or PepsiAmericas, if:
- any governmental entity having jurisdiction over a party has issued an
order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting
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the completion of the merger and such order, decree or ruling or other
action has become final and nonappealable;
- either the approval of the PepsiAmericas shareholders or the approval
of the Whitman shareholders is not obtained; or
- the merger has not been completed by February 28, 2001, unless the
failure to complete the merger is the result of a material breach of
the merger agreement by the party seeking to terminate;
- by Whitman, if PepsiAmericas has failed to perform or comply with in any
material respect any material obligation, agreement or covenant to be
performed or complied with by it under the merger agreement or has
breached in any material respect any of its representations or warranties
contained in the merger agreement, and the failure to perform or breach
cannot be cured so as to satisfy a specified closing condition prior to
February 28, 2001;
- by PepsiAmericas, if either Whitman or Anchor Merger Sub has failed to
perform or comply with in any material respect any material obligation,
agreement or covenant to be performed or complied with by it under the
merger agreement or has breached in any material respect any of its
representations or warranties contained in the merger agreement, and the
failure to perform or breach cannot be cured so as to satisfy a specified
closing condition prior to February 28, 2001;
- by Whitman, if PepsiAmericas, its board of directors or any committee
thereof:
- has withdrawn or modified in a manner adverse to Whitman or Anchor
Merger Sub its approval or recommendation of the merger and the merger
agreement or has approved or recommended any takeover proposal;
- has taken any action that is prohibited by the covenant described above
under "--Principal Covenants--No Solicitation;"
- fails to hold its special meeting; or
- has resolved to do any of the foregoing.
- by PepsiAmericas, if Whitman, its board of directors or any committee
thereof:
- has withdrawn or modified in a manner adverse to PepsiAmericas its
approval or recommendation of the issuance of shares of Whitman common
stock in the merger or has approved or recommended any takeover
proposal;
- has taken any action that is prohibited by the covenant described above
under "--Principal Covenants--No Solicitation;"
- fails to hold its special meeting; or
- has resolved to do any of the foregoing.
If the merger agreement is validly terminated, the merger agreement will
become void without any liability or obligation on the part of any party or its
officers or directors, except that no party will be relieved of any liability or
damages resulting from its material breach of the merger agreement. In addition,
the provisions of the merger agreement relating to the effect of the termination
of the merger agreement, the provisions relating to the payment of fees and
expenses and the confidentiality agreement entered into between Whitman and
PepsiAmericas will continue in effect notwithstanding termination of the merger
agreement.
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FEES AND EXPENSES
All costs and expenses incurred in connection with the merger, the merger
agreement and the transactions contemplated by the merger agreement will be paid
by the party incurring such fees or expenses, whether or not the merger is
completed, except that PepsiAmericas and Whitman will share equally all fees and
expenses, other than attorneys' and accounting fees and expenses, incurred in
relation to the printing, filing and mailing of the registration statement and
this proxy statement/ prospectus.
AMENDMENT; WAIVER
The merger agreement may be amended by the parties in writing at any time,
by action taken or authorized by their respective boards of directors, except
that after the merger agreement has been adopted by the PepsiAmericas
shareholders or after the issuance of shares of Whitman common stock in the
merger has been approved by the Whitman shareholders, no amendment may be
entered into which by law requires further approval by the shareholders of
PepsiAmericas or Whitman, as applicable, unless such further approval is
obtained.
At any time prior to the effective time of the merger, a party may, by
written instrument signed on behalf of such party, to the extent legally
allowed:
- extend the time for the performance of any of the obligations or other
acts of the other parties;
- waive any inaccuracies in the representations and warranties contained in
the merger agreement or in any document delivered pursuant to the merger
agreement; or
- waive compliance with any of the agreements or conditions contained in the
merger agreement.
PEPSICO SHAREHOLDER AGREEMENT
The following summary description of the amended and restated shareholder
agreement between Whitman and PepsiCo is qualified in its entirety by reference
to, and we encourage you to read carefully, the complete text of the Amended and
Restated PepsiCo Shareholder Agreement, which we have attached as Annex G to
this proxy statement/prospectus.
OWNERSHIP OF WHITMAN COMMON STOCK
The amended and restated shareholder agreement generally limits PepsiCo and
its affiliates to a maximum ownership percentage of 49.0% of the voting power of
Whitman and generally limits PepsiCo and its affiliates, together with Robert C.
Pohlad, his affiliates and his family, to a combined maximum ownership
percentage of 49.9% of the voting power of Whitman. However, so long as the
maximum ownership percentage or combined maximum ownership percentage is
exceeded due to an acquisition of Whitman securities which is permitted by the
amended and restated shareholder agreement, the applicable maximum ownership
percentage(s) is increased appropriately to allow such acquisition.
Acquisitions by PepsiCo and its affiliates permitted under the amended and
restated shareholder agreement include:
- any transaction that would not result in the maximum ownership percentage
or combined maximum ownership percentage being exceeded;
- a tender offer or exchange offer by PepsiCo or its affiliates for all
voting securities of Whitman not beneficially owned by PepsiCo and its
affiliates at a price not less than the minimum price calculated as set
forth in the amended and restated shareholder agreement;
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- any merger or business combination in which all voting securities of
Whitman not beneficially owned by PepsiCo and its affiliates are exchanged
or converted at a price not less than the minimum price calculated as set
forth in the shareholder agreement;
- any merger or business combination approved by Whitman shareholders
excluding PepsiCo and its affiliates;
- a transaction approved by a majority of directors who are independent of
PepsiCo and Robert C. Pohlad and their respective affiliates; and
- an acquisition of voting securities of Whitman by Robert C. Pohlad, his
affiliates or his family approved by the Affiliated Transaction Committee
of the Whitman board (or if such committee is not in existence, by a
committee of the Whitman board composed entirely of independent
directors).
For purposes of the amended and restated shareholder agreement, independent
directors are directors unaffiliated with PepsiCo and its affiliates, or with
Robert C. Pohlad, his affiliates and his family, and who are not officers,
employees, consultants or advisors to Whitman and have not been within the past
two years.
The minimum price referred to above is the highest average of Whitman
closing prices on the NYSE over any 20 consecutive day period during the
18 months preceding the announcement of the offer or business combination in
question.
CONDUCT BY PEPSICO
The amended and restated shareholder agreement provides that PepsiCo and its
affiliates will not take any of the following actions without the prior approval
of a majority of the independent directors:
- acquire, propose to acquire, disclose an intention to acquire, or offer or
agree to acquire beneficial ownership of any voting security of Whitman
which would cause the maximum ownership percentage or combined maximum
ownership percentage to be exceeded, other than pursuant to an acquisition
permitted by the amended and restated shareholder agreement;
- form, join or in any way participate in a group which would be required to
file a statement on Schedule 13D as a "person" under Section 13(d)(3) of
the Exchange Act with respect to any voting securities of Whitman or its
subsidiaries if such group's ownership of Whitman voting securities would
exceed the maximum ownership percentage; or
- initiate a merger, acquisition or other business combination transaction
relating to Whitman, other than a combination of a party unaffiliated with
PepsiCo with Whitman which would not be a permitted acquisition under the
shareholder agreement.
In addition, if at any time PepsiCo becomes aware that the ownership of
PepsiCo and its affiliates exceeds the maximum ownership percentage, except as
specifically permitted under the amended and restated shareholder agreement,
PepsiCo and its affiliates will promptly take all action necessary to reduce the
amount of voting securities of Whitman beneficially owned by them so that they
are below the maximum ownership percentage. See "--Transfers by PepsiCo."
If at any time PepsiCo becomes aware that the combined maximum ownership
percentage has been exceeded as a result of a reduction in the number of voting
securities outstanding, PepsiCo and its affiliates will take specified actions
to reduce their ownership, though in taking certain actions the reduction need
only be pro rata based on the relative ownership of PepsiCo and its affiliates,
on the one hand, and Robert C. Pohlad, his affiliates and his family, on the
other hand.
If at any time PepsiCo becomes aware that the combined maximum ownership
percentage has been exceeded (other than as a result of reduction in the number
of voting securities outstanding),
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PepsiCo and its affiliates will promptly take actions to reduce the amount of
voting securities of Whitman beneficially owned by them so that the combined
maximum ownership percentage is not exceeded, though if the reason that the
combined maximum ownership percentage has been exceeded is due to an acquisition
of voting securities by Robert C. Pohlad, his affiliates or his family, PepsiCo
and its affiliates will not be required to reduce their ownership percentage.
NO AGREEMENTS WITH THE POHLAD GROUP; DAKOTA HOLDINGS
While the amended and restated shareholder agreement is in effect, none of
PepsiCo or its affiliates will, directly or indirectly, enter into any agreement
or commitment with Robert C. Pohlad, any of his affiliates or any member of his
family with respect to the holding, voting acquisition or disposition of voting
securities of Whitman. The foregoing prohibition specifically excludes the
amended and restated limited liability company agreement of Dakota Holdings so
long as (1) such limited liability company agreement provides that PepsiCo and
its affiliates ultimately have sole power with respect to the voting of a
certain number of voting securities of Whitman held by Dakota Holdings and have
no power with respect to the voting of the remainder of the voting securities of
Whitman held by Dakota Holdings and (2) Dakota Holdings takes no action to
acquire beneficial ownership of any additional voting securities of Whitman
except as permitted by the amended and restated shareholder agreement.
TRANSFERS BY PEPSICO
PepsiCo and its affiliates may transfer any of their voting securities of
Whitman to any transferee without restriction except for significant transferees
who would own 20% or more of Whitman voting securities after the transfer.
PepsiCo and its affiliates may effect a transfer to a significant transferee
with the prior written consent of a majority of the independent directors.
However, PepsiCo and its affiliates may transfer voting securities of Whitman to
any significant transferee without restriction and without obtaining such
consent if, at the time of the transfer, PepsiCo and its affiliates beneficially
own at least 20% of the outstanding voting securities of such significant
transferee and no other person beneficially owns a greater percentage of such
significant transferee than PepsiCo and its affiliates. PepsiCo and its
affiliates would need to obtain the prior written consent of a majority of the
independent directors of Whitman to transfer any voting securities of the
significant transferee if, at the time of that transfer, such significant
transferee owns greater than 20% of Whitman voting securities and that transfer
would result in PepsiCo and its affiliates beneficially owning less than 20% of
the voting securities of such significant transferee or any other person
beneficially owning a greater percentage of such significant transferee than
PepsiCo and its affiliates. None of the foregoing restrictions will apply to
(1) a transfer of Whitman voting securities by PepsiCo or any of its affiliates
in a public offering where reasonable efforts are made to achieve a wide
distribution of such voting securities, (2) a liquidation of Dakota Holdings or
other distribution of its assets to its members in proportion to their capital
accounts or (3) a transfer of voting securities of Whitman among PepsiCo and its
affiliates, provided that any such transferee agrees in writing prior to each
such transfer to be bound by the terms of the amended and restated shareholder
agreement.
SPECIAL MEETINGS REQUESTED BY PEPSICO
PepsiCo and its affiliates may request a special meeting of the shareholders
of Whitman in accordance with the Whitman bylaws or may nominate an alternative
slate of directors to the slate proposed by the Whitman board at any annual
meeting of shareholders. The amended and restated shareholder agreement provides
that if PepsiCo takes any such action, Whitman will not, without PepsiCo's
consent, from the date of receipt of the request or nomination, as the case may
be, until the
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adjournment of the requested special meeting or the annual meeting, as the case
may be, take any of the following actions:
- effect a material change in its capital structure
- declare or pay a dividend, other than any regular quarterly dividend
- materially increase the compensation of any executive officer
- take any material action not in the ordinary course of business.
However, this provision will not restrict the ability of Whitman to comply with
commitments entered into prior to the date of the request.
CHARTER, BYLAWS AND RIGHTS AGREEMENT
The amended and restated shareholder agreement provides that, neither
Whitman nor PepsiCo or its affiliates will attempt to amend, alter or repeal any
provision of the Whitman charter or the Whitman bylaws in any manner
inconsistent with the terms of the amended and restated shareholder agreement.
If the provisions of the amended and restated shareholder agreement conflict
with the provisions of the Whitman charter or the Whitman bylaws, Whitman and
PepsiCo will use all reasonable efforts, consistent with their fiduciary
responsibilities, to cause the provisions of the Whitman charter and the Whitman
bylaws to conform with the amended and restated shareholder agreement.
The amended and restated shareholder agreement provides that, Whitman will
not amend any provision of the Whitman rights agreement in any manner
inconsistent with the shareholder agreement or the merger agreement and which
adversely affects the rights of PepsiCo and its affiliates under the terms of
the amended and restated shareholder agreement. Whitman also will not adopt any
new rights agreement which is inconsistent with the terms of the amended and
restated shareholder agreement or the merger agreement and which adversely
affects the rights of PepsiCo and its affiliates under the terms of the amended
and restated shareholder agreement.
WHITMAN BOARD COMPOSITION
Pursuant to the amended and restated shareholder agreement, upon
consummation of the merger, the Whitman board will consist of the current
directors of Whitman and Robert C. Pohlad, except that Mr. Chelberg will retire
from the Whitman board at the effective time of the merger.
TERM
The amended and restated shareholder agreement will take effect immediately
upon the closing of the merger and will remain in effect until the earliest to
occur of:
- the date on which PepsiCo and its affiliates' ownership of Whitman voting
securities falls below 15%;
- subject to the provisions described in the following paragraph, the date
on which a permitted acquisition is consummated which results in PepsiCo
and its affiliates, together with Robert C. Pohlad, his affiliates and his
family, beneficially owning 75% or more of the voting power of Whitman;
- two years from the first date on which the following two conditions are
met: (a) PepsiCo and its affiliates, together with Robert C. Pohlad, his
affiliates and his family, beneficially own more than 55% but less than
75% of the voting power of Whitman and (b) PepsiCo and its affiliates have
consummated a tender offer or exchange offer for Whitman securities at a
price not less than the minimum price, as defined in the amended and
restated shareholder agreement,
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pursuant to which at least 10% of the voting power of Whitman not
beneficially owned by PepsiCo and its affiliates, or Robert C. Pohlad, his
affiliates or his family, prior to such offer was acquired; and
- any termination date mutually agreed upon by Whitman and PepsiCo.
For 90 days after the consummation of a permitted acquisition pursuant to
which PepsiCo and affiliates, together with Robert C. Pohlad, his affiliates and
his family, become the beneficial owner of 75% or more of Whitman common stock,
Whitman will not, without PepsiCo's consent, take any action or enter into any
agreement which:
- restricts the acquisition by PepsiCo and its affiliates of any voting
securities of Whitman;
- restricts in any manner the transfer of any voting securities of Whitman
by PepsiCo and its affiliates;
- restricts any right of PepsiCo and its affiliates to initiate a merger,
acquisition or business combination relating to Whitman;
- otherwise restricts in any manner the ability of PepsiCo and its
affiliates to take any action with respect to voting securities of
Whitman, including amending the Whitman rights agreement to provide for
any such restriction;
- effects a material change in Whitman's capital structure;
- declares or pays a dividend other than any regular quarterly dividend;
- materially increases the compensation of any executive officer; or
- is a material action not in the ordinary course of business.
However, this provision will not restrict the ability of Whitman to comply
with commitments entered into prior to the date of such permitted acquisition.
POHLAD SHAREHOLDER AGREEMENT
The following summary description of the shareholder agreement among
Whitman, Pohlad Companies, Dakota Holdings and Robert C. Pohlad is qualified in
its entirety by reference to, and we encourage you to read carefully, the
complete text of the Pohlad Shareholder Agreement, which we have attached as
Annex H to this proxy statement/prospectus.
OWNERSHIP OF WHITMAN COMMON STOCK
The Pohlad shareholder agreement generally limits Robert C. Pohlad, his
affiliates and his family to a maximum ownership percentage equal to their
aggregate percentage of the voting power of Whitman upon the consummation of the
transactions contemplated by the merger agreement (including purchases of the
subscription shares and purchases pursuant to the right of Pohlad Companies to
acquire Whitman common stock with a value of $25 million from PepsiCo and its
affiliates) and generally limits Robert C. Pohlad, his affiliates and his
family, together with PepsiCo and its affiliates, to a combined maximum
ownership percentage of 49.9% of the voting power of Whitman. However, so long
as the maximum ownership percentage or combined maximum ownership percentage is
exceeded due to an acquisition of Whitman securities which is permitted by the
Pohlad shareholder agreement, the applicable maximum ownership percentage(s) is
increased to the extent necessary to allow such acquisition.
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Acquisitions by Robert C. Pohlad, his affiliates and his family permitted
under the Pohlad shareholder agreement include:
- any transaction that would not result in the maximum ownership percentage
or combined maximum ownership percentage being exceeded;
- any acquisition of voting securities pursuant to the contingent payment
alternative or any transaction contemplated by the merger agreement;
- any acquisition pursuant to the right of Pohlad Companies to acquire
Whitman common stock with a value of $25 million from PepsiCo and its
affiliates;
- a transaction (including the grant of any options to purchase Whitman
common stock granted to Robert C. Pohlad, any of his affiliates or any
member of his family) approved by the Affiliated Transaction Committee of
the Whitman board (or if such committee is not in existence, by a
committee of the Whitman board composed entirely of independent
directors); and
- an acquisition of voting securities of Whitman by PepsiCo or its
affiliates permitted under the amended and restated PepsiCo shareholder
agreement.
For purposes of the Pohlad shareholder agreement, independent directors are
directors unaffiliated with Robert C. Pohlad, his affiliates and his family, or
with PepsiCo and its affiliates, and who are not officers, employees,
consultants or advisors to Whitman and have not been within the past two years.
CONDUCT BY THE POHLAD GROUP
The Pohlad shareholder agreement provides that, Robert C. Pohlad, his
affiliates and his family will not take any of the following actions without the
prior approval of the Affiliated Transaction Committee:
- acquire, propose to acquire, disclose an intention to acquire, or offer or
agree to acquire beneficial ownership of any voting security of Whitman
which would cause the maximum ownership percentage or combined maximum
ownership percentage to be exceeded, other than pursuant to an acquisition
permitted by the Pohlad shareholder agreement;
- form, join or in any way participate in a group which would be required to
file a statement on Schedule 13D as a "person" under Section 13(d)(3) of
the Exchange Act with respect to any voting securities of Whitman or its
subsidiaries if such group's ownership of Whitman voting securities would
exceed the maximum ownership percentage; or
- initiate a merger, acquisition or other business combination transaction
relating to Whitman, other than a combination of a party unaffiliated with
Robert C. Pohlad, his affiliates and his family with Whitman which would
not be a permitted acquisition under the Pohlad shareholder agreement.
In addition, if at any time Pohlad Companies, Dakota Holdings or Robert
Pohlad becomes aware that the ownership of Robert C. Pohlad, his affiliates and
his family exceeds the maximum ownership percentage, except as specifically
permitted under the Pohlad shareholder agreement, Robert C. Pohlad, his
affiliates and his family will promptly take all action necessary to reduce the
amount of voting securities of Whitman beneficially owned by them so that they
are below the maximum ownership percentage.
If at any time Pohlad Companies, Dakota Holdings or Robert C. Pohlad becomes
aware that the combined maximum ownership percentage has been exceeded as a
result of a reduction in the number of voting securities outstanding, Robert C.
Pohlad, his affiliates and his family will take specified actions to reduce
their ownership, though in taking such actions the reduction need only be pro
rata
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based on the relative ownership of Robert C. Pohlad, his affiliates and his
family, on the one hand, and PepsiCo and its affiliates, on the other hand.
If at any time Pohlad Companies, Dakota Holdings or Robert C. Pohlad becomes
aware that the combined maximum ownership percentage has been exceeded (other
than as a result of reduction in the number of voting securities outstanding),
Robert C. Pohlad, his affiliates and his family will promptly take actions to
reduce the amount of voting securities of Whitman beneficially owned by them so
that the combined maximum ownership percentage is not exceeded, though if the
reason that the combined maximum ownership percentage has been exceeded is due
to an acquisition of voting securities by PepsiCo or its affiliates, Robert C.
Pohlad, his affiliates and his family will not be required to reduce their
ownership percentage.
NO AGREEMENTS WITH PEPSICO; DAKOTA HOLDINGS
While the Pohlad shareholder agreement is in effect, none of Robert C.
Pohlad, any of his affiliates or any member of his family will, directly or
indirectly, enter into any agreement or commitment with PepsiCo or its
affiliates with respect to the holding, voting, acquisition or disposition of
voting securities of Whitman. The foregoing prohibition specifically excludes
the amended and restated limited liability company agreement of Dakota Holdings
so long as (1) such limited liability company agreement provides that Robert C.
Pohlad, his affiliates and his family have sole power with respect to the voting
of a certain number of voting securities of Whitman held by Dakota Holdings and
have no power with respect to the voting of the remainder of the voting
securities of Whitman held by Dakota Holdings which is not subject to the
ultimate power of PepsiCo and (2) Dakota Holdings takes no action to acquire
beneficial ownership of any additional voting securities of Whitman except as
permitted by the Pohlad shareholder agreement.
OPTIONS
Whitman will not grant to Robert C. Pohlad, any of his affiliates or any
member of his family any options to purchase Whitman common stock unless such
grant is approved by the Affiliated Transaction Committee (or if such committee
is not in existence, by a committee of the Whitman board composed entirely of
independent directors).
SPECIAL MEETINGS REQUESTED BY THE POHLAD GROUP
If Robert C. Pohlad, his affiliates and his family request a special meeting
of the shareholders of Whitman in accordance with the Whitman bylaws or nominate
an alternative slate of directors to the slate proposed by the Whitman board at
any annual meeting of shareholders, Whitman will not, without the consent of
Pohlad Companies, Dakota Holdings and Robert C. Pohlad, from the date of receipt
of the request or nomination, as the case may be, until the adjournment of the
requested special meeting or the annual meeting, as the case may be, take any of
the following actions:
- effect a material change in its capital structure;
- declare or pay a dividend, other than any regular quarterly dividend;
- materially increase the compensation of any executive officer; or
- take any material action not in the ordinary course of business.
However, this provision will not restrict the ability of Whitman to comply
with commitments entered into prior to the date of the request.
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CHARTER, BYLAWS AND RIGHTS AGREEMENT
The Pohlad shareholder agreement provides that, neither Whitman nor Robert
C. Pohlad, any of his affiliates or any member of his family will attempt to
amend, alter or repeal any provision of the Whitman charter or the Whitman
bylaws in any manner inconsistent with the terms of the Pohlad shareholder
agreement. If the provisions of the Pohlad shareholder agreement conflict with
the provisions of the Whitman charter or the Whitman bylaws, Whitman, Pohlad
Companies, Dakota Holdings and Robert C. Pohlad will use all reasonable efforts,
consistent with their fiduciary responsibilities, to cause the provisions of the
Whitman charter and the Whitman bylaws to conform with the Pohlad shareholder
agreement.
The Pohlad shareholder agreement provides that Whitman will not amend any
provision of the Whitman rights agreement in any manner inconsistent with the
shareholder agreement or the merger agreement and which adversely affects the
rights of Robert C. Pohlad, his affiliates or his family under the terms of the
Pohlad shareholder agreement. Whitman also will not adopt any new rights
agreement which is inconsistent with the terms of the Pohlad shareholder
agreement or the merger agreement and which adversely affects the rights of
Robert Pohlad, his affiliates and his family under the terms of the Pohlad
shareholder agreement.
WHITMAN BOARD COMPOSITION
Pursuant to the Pohlad shareholder agreement, upon consummation of the
merger, the Whitman board will consist of the current directors of Whitman and
Robert C. Pohlad (except that Mr. Chelberg will retire from the Whitman board at
the effective time of the merger) and immediately following the consummation of
the merger, Mr. Pohlad will be elected Chief Executive Officer of Whitman.
TERM
The Pohlad shareholder agreement will take effect immediately upon the
closing of the merger and will remain in effect until it is terminated by
written agreement of Whitman (which will require the approval of the Affiliated
Transaction Committee, or if such committee is not in existence, a committee of
the Whitman board composed entirely of independent directors) and Pohlad
Companies, Dakota Holdings and Robert C. Pohlad.
THE VOTING AGREEMENTS
The following summary description of the voting agreements is qualified in
its entirety by reference to, and we encourage you to read carefully, the
complete text of the PepsiAmericas Stockholder Voting Agreement and the Whitman
Stockholder Voting Agreement, which we incorporate by reference as exhibits to
the registration statement of which this joint proxy statement/prospectus is a
part. See "Where You Can Find More Information."
PEPSIAMERICAS STOCKHOLDER VOTING AGREEMENT
Concurrently with the execution of the merger agreement, Whitman entered
into a voting agreement with Dakota Holdings, which as of the date of such
agreement held 4,000,000 shares of PepsiAmericas Class A common stock and
57,078,274 shares of PepsiAmericas Class B common stock (or approximately 72% of
the voting power of the outstanding shares).
Pursuant to such agreement, Dakota Holdings has agreed that, until its
obligations thereunder are terminated as provided below, it will not:
- directly or indirectly, sell, offer to sell, grant any option for the sale
of, pledge, encumber, or otherwise transfer or dispose of, or enter into
any agreement to sell, any shares of
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PepsiAmericas common stock owned or thereafter acquired by it, other than
pursuant to the merger;
- grant any proxies or powers of attorney, deposit any shares of
PepsiAmericas common stock owned or thereafter acquired by it into a
voting trust or enter into any voting agreement or arrangement with
respect to such shares; or
- take any action that would prevent or disable it from performing its
obligations thereunder or that would cause any of its representation or
warranty contained therein or any representations or warranties of
PepsiAmericas contained in the merger agreement to be untrue or incorrect.
Dakota Holdings has further agreed to vote, or cause to be voted, all of the
shares of PepsiAmericas common stock owned by or thereafter acquired by it, at
any meeting of PepsiAmericas shareholders (including any adjournment thereof):
- in favor of the merger, the adoption of the merger agreement and the
approval of the terms thereof and each of the other transactions
contemplated by the merger agreement;
- against any recapitalization, merger, consolidation, sale of assets or
other business combination or similar transaction involving PepsiAmericas
or any subsidiary, securities or assets of PepsiAmericas which is not
endorsed in writing by Whitman; and
- against any other action or agreement that would result in a breach of any
covenant, representation or warranty or any other obligation or agreement
of PepsiAmericas under the merger agreement or that could result in any of
the conditions to PepsiAmericas' obligations to complete the merger not
being fulfilled.
In addition, Dakota Holdings has agreed that it will not, and will not
permit or authorize any of its affiliates, directors, officers, employees or
other representatives to, directly or indirectly:
- vote any of its shares of PepsiAmericas common stock in favor of any
takeover proposal;
- solicit, initiate or knowingly encourage the submission of any takeover
proposal; or
- participate in any discussions or negotiations regarding, or furnish any
information with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes or may reasonably
be expected to lead to, any takeover proposal.
Dakota Holdings will cooperate with Whitman to support and to complete, in
the most expeditious manner as practicable, the merger and the other
transactions contemplated by the merger agreement.
The voting agreement and, subject to the next sentence, Dakota Holdings'
obligations thereunder will be terminated upon the earlier of the termination of
the merger agreement in accordance with its terms or the effective time of the
merger. If the merger agreement is terminated either:
- by Whitman or PepsiAmericas, because the PepsiAmericas shareholders failed
to adopt the merger agreement; or
- by Whitman, because the board of directors of PepsiAmericas or any
committee thereof withdrew or modified, in a manner adverse to Whitman or
Anchor Merger Sub, its approval or recommendation of the merger agreement
and the merger or approved or recommended a takeover proposal.
In either case, the obligations of Dakota Holdings under the voting
agreement will survive for 90 days following termination of the merger
agreement.
No termination of the voting agreement will relieve Dakota Holdings from
liability for any breach of its obligations under the voting agreement committed
prior to such termination.
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WHITMAN STOCKHOLDER VOTING AGREEMENT
Concurrently with the execution of the merger agreement, PepsiAmericas
entered into a voting agreement with PepsiCo, which as of the date of such
agreement directly or indirectly held 54,794,115 shares (or approximately 40% of
the voting power of the outstanding shares) of Whitman common stock.
Pursuant to such agreement, PepsiCo has agreed that, until its obligations
thereunder are terminated as provided below, it will not:
- directly or indirectly, sell, offer to sell, grant any option for the sale
of, pledge, encumber, or otherwise transfer or dispose of, or enter into
any agreement to sell, any shares of Whitman common stock owned or
thereafter acquired by it, other than pursuant to the merger or the direct
or indirect transfer of control with respect to approximately $25 million
in value of shares of Whitman common stock to Pohlad Companies or its
affiliates;
- grant any proxies or powers of attorney, deposit any shares of Whitman
common stock owned or thereafter acquired by it into a voting trust or
enter into any voting agreement or arrangement with respect to such
shares; or
- take any action that would prevent or disable it from performing its
obligations thereunder or that would cause any of its representation or
warranty contained therein or any representations or warranties of Whitman
contained in the merger agreement to be untrue or incorrect.
PepsiCo has further agreed to vote, or cause to be voted, all of the shares
of Whitman common stock owned by or thereafter acquired by it, at any meeting of
Whitman shareholders (including any adjournment thereof):
- in favor of the issuance of shares of Whitman common stock in the merger;
- against any recapitalization, merger, consolidation, sale of assets or
other business combination or similar transaction involving Whitman or any
subsidiary, securities or assets of Whitman which is not endorsed in
writing by PepsiAmericas; and
- against any other action or agreement that would result in a breach of any
covenant, representation or warranty or any other obligation or agreement
of Whitman under the merger agreement or that could result in any of the
conditions to Whitman's obligations to complete the merger not being
fulfilled.
In addition, PepsiCo has agreed that it will not, and will not permit or
authorize any of its affiliates, directors, officers, employees or other
representatives to, directly or indirectly:
- vote any of its shares of PepsiAmericas stock in favor of any takeover
proposal;
- solicit, initiate or knowingly encourage the submission of any takeover
proposal; or
- participate in any discussions or negotiations regarding, or furnish any
information with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes or may reasonably
be expected to lead to, any takeover proposal.
PepsiCo will cooperate with PepsiAmericas to support and to complete, in the
most expeditious manner as practicable, the merger and the other transactions
contemplated by the merger agreement.
The voting agreement and, subject to the next sentence, PepsiCo's
obligations thereunder will be terminated upon the earlier of the termination of
the merger agreement in accordance with its terms or the effective time of the
merger. If the merger agreement is terminated either:
- by Whitman or PepsiAmericas, because the Whitman shareholders failed to
approve the issuance of shares of Whitman common stock in the merger; or
- by PepsiAmericas, because the board of directors of Whitman or any
committee thereof withdrew or modified, in a manner adverse to
PepsiAmericas, its approval or recommendation of the issuance of shares of
Whitman common stock in the merger or approved or recommended a takeover
proposal.
In either case, the obligations of PepsiCo under the voting agreement will
survive for 90 days following termination of the merger agreement.
No termination of the voting agreement will relieve PepsiCo from liability
for any breach of its obligations under the voting agreement committed prior to
such termination.
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COMPARISON OF SHAREHOLDER RIGHTS
Each of Whitman and PepsiAmericas is organized under the laws of the State
of Delaware. Any differences, therefore, in the rights of holders of Whitman
common stock and PepsiAmericas common stock arise primarily from differences in
their respective certificates of incorporation and bylaws. Upon completion of
the merger, holders of PepsiAmericas common stock will become holders of Whitman
common stock and their rights will be governed by Delaware law, the Whitman
restated certificate of incorporation, the Whitman bylaws and the Whitman rights
agreement.
This section of the joint proxy statement/prospectus describes the material
differences between the rights of Whitman shareholders and PepsiAmericas
shareholders. This section does not include a complete description of all
differences among the rights of these shareholders, nor does it include a
complete description of the specific rights of these shareholders. In addition,
the identification of some of the differences in the rights of these
shareholders as material is not intended to indicate that other differences that
are equally important do not exist. All Whitman shareholders and PepsiAmericas
shareholders are urged to read carefully the relevant provisions of Delaware
law, as well as the restated certificates of incorporation and bylaws of each of
Whitman and PepsiAmericas. Copies of the restated certificates of incorporation
and bylaws of Whitman and PepsiAmericas will be sent to Whitman shareholders and
PepsiAmericas shareholders, as applicable, upon request. See "Where You Can Find
More Information."
Upon completion of the merger, Whitman will amend its bylaws as described
under "The Merger Agreement--Amendment to Whitman Bylaws and PepsiCo Shareholder
Agreement; Pohlad Companies Shareholder Agreement."
AUTHORIZED CAPITAL STOCK
WHITMAN. The Whitman restated certificate of incorporation authorizes the
issuance of up to 362,500,000 shares of all classes of stock, of which
350,000,000 shares shall be common stock, par value $0.01 per share, and
12,500,000 shares shall be preferred stock, par value $0.01 per share. Of the
shares of preferred stock, 2,000,000 have been designated as Whitman series A
junior participating preferred stock. As of [date], 2000, [number] shares of
Whitman common stock and no shares of Whitman Series A junior participating
preferred stock were issued and outstanding.
PEPSIAMERICAS. The PepsiAmericas restated certificate of incorporation
authorizes the issuance of up to 150,000,000 shares of all classes of stock, of
which 5,000,000 shares are Class A common stock, par value $0.01 per share and
145,000,000 shares are Class B common stock, par value $0.01 per share. As of
[date], 2000, 5,000,000 shares of PepsiAmericas Class A common stock and
82,314,377 shares of PepsiAmericas Class B common stock were issued and
outstanding.
SIZE OF THE BOARD OF DIRECTORS
WHITMAN. The board of directors is currently fixed pursuant to resolution
of the board of directors at 10 directors. The bylaws require that the number of
directors be not less than three.
PEPSIAMERICAS. The board of directors is currently fixed pursuant to
resolution of the board of directors at eight directors. The amended and
restated bylaws require that the number of directors be not less than one nor
more than nine.
ELECTION OF DIRECTORS
WHITMAN. The board of directors is elected each year at the annual meeting.
In elections for directors, the nominees receiving the highest number of votes
cast for the number of director positions to be filled shall be elected.
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PEPSIAMERICAS. The board of directors is elected each year at the annual
meeting. In elections for directors, the nominees receiving the highest number
of votes cast for the number of director positions to be filled shall be
elected. Each share of Class A common stock entitles the holder to six votes and
each share of Class B common stock entitles the holder to one vote.
VACANCIES
GENERAL. Delaware law provides that vacancies and newly created
directorships resulting from a resignation or any increase in the authorized
number of directors elected by all of the shareholders having the right to vote
as a single class may be filled by a majority of the directors then in office,
unless the governing documents of a corporation provide otherwise.
WHITMAN. Vacancies or newly created directorships resulting from an
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, and the directors so
chosen shall hold office until their successors are duly elected and shall
qualify. If, at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the whole board (as constituted immediately prior to any such increase), the
Court of Chancery may, upon application of any shareholder or holder or holders
of at least ten percent of the votes of the shares at the time outstanding
having the right to vote for such directors, summarily order an election to be
held to fill any such vacancies or newly created directorships, or to replace
the directors chosen by the directors then in office. Except as otherwise
provided in the bylaws, when one or more directors shall resign from the board,
effective at a future date, a majority of the directors then in office,
including those who have so resigned, shall have power to fill such vacancy or
vacancies, to vote thereon to take effect when such resignation or resignations
shall become effective, and each director so chosen shall hold office as in the
filling of other vacancies.
PEPSIAMERICAS. Unless filled by the shareholders, any vacancy occurring on
the board of directors, including any vacancy created because of an increase in
the number of directors, may be filled by the affirmative vote of a majority of
the remaining directors, even if the number of remaining directors does not
constitute a quorum of the board. A director elected to fill a vacancy shall
hold office only until the next election of directors by the shareholders.
ANNUAL MEETING OF SHAREHOLDERS
GENERAL. If an annual meeting for the election of directors is not held on
the date designated therefore, Delaware law requires the directors to cause the
meeting to be held as soon thereafter as convenient. If they fail to do so for a
period of 30 days after the designated date, or if no date has been designated
for a period of 13 months after the organization of the corporation or after its
last annual meeting, then, upon application of any shareholder or director, the
Court of Chancery may order a meeting to be held.
WHITMAN. The annual meeting of the shareholders is held on the first
Thursday of May at 10:30 a.m. in Chicago, Illinois or on such other date or at
such other time or place as shall be designed by the board of directors.
PEPSIAMERICAS. The annual meeting of shareholders for the election of
directors and the transaction of other business shall be held each year on the
date and at the time and place that the board of directors determines.
SPECIAL MEETING OF SHAREHOLDERS
GENERAL. Delaware law permits the board of directors or any other person
authorized by a corporation's charter or bylaws to call a special meeting of
shareholders.
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WHITMAN. Special meetings of the shareholders may be called by the Chairman
and Chief Executive Officer, a majority of the board of directors or any
shareholder which, individually or together with any other shareholders, owns
20% or more of the issued and outstanding common stock. Business transacted at
any special meeting of shareholders is limited to the purpose stated in the
notice of meeting.
PEPSIAMERICAS. Special meetings of shareholders may be called by the
president or the board of directors or when requested in writing by the holders
of not less than 51% of the voting power of all the shares entitled to vote.
Business transacted at any special meeting of shareholders is limited to the
purpose stated in the notice of meeting.
ACTION BY WRITTEN CONSENT
GENERAL. Delaware law provides that, unless otherwise stated in the
certificate of incorporation, any action which may be taken at an annual meeting
or special meeting of shareholders may be taken without a meeting, if a consent
in writing is signed by the holders of the outstanding stock having the minimum
number of votes necessary to authorize the action at a meeting of shareholders.
WHITMAN. The Whitman restated certificate of incorporation does not permit
the use of written consents by Whitman shareholders.
PEPSIAMERICAS. Any action by written consent must be unanimous.
ADVANCE NOTICE REQUIREMENTS FOR SHAREHOLDER NOMINATIONS AND OTHER BUSINESS
WHITMAN. Whitman's bylaws provide that in order for a shareholder to
nominate a candidate for election as a director at an annual meeting of
shareholders or propose business for consideration at such meeting, the
shareholder must generally notify Whitman in writing at the principal executive
office of Whitman not later than the close of business the 60th day nor earlier
than the 90th day prior to the meeting or not later than the close of business
on the tenth day following the first public disclosure of the date of such
meeting if stockholders are given less than 70 days' notice.
PEPSIAMERICAS. PepsiAmericas bylaws do not establish advance notice
procedures.
AMENDMENTS TO CHARTER
GENERAL. Under Delaware law, an amendment to the certificate of
incorporation of a corporation requires the approval of the corporation's board
of directors and the approval of holders of a majority of the outstanding stock
entitled to vote upon the proposed amendment, unless a higher vote is required
by the corporation's certificate of incorporation.
WHITMAN. The Whitman restated certificate of incorporation provides
generally that amendments may be made as prescribed by statute. However, certain
charter provisions relating to Pepsico require the affirmative vote of
two-thirds of the entire Whitman board of directors to amend.
PEPSIAMERICAS. The PepsiAmericas restated certificate of incorporation does
not provide for a higher vote to amend its certificate of incorporation.
AMENDMENTS TO BYLAWS
GENERAL. Under Delaware law, shareholders entitled to vote have the power
to adopt, amend or repeal bylaws. In addition, a corporation may, in its
certificate of incorporation, confer this power on the board of directors. The
shareholders always have the power to adopt, amend or repeal the bylaws, even
though the board may also be delegated the power.
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WHITMAN. The bylaws of Whitman may be amended or repealed, or new bylaws
may be adopted, by two-thirds of the whole board of directors at any meeting
thereof; provided that bylaws adopted by the board may be amended or repealed by
the shareholders.
PEPSIAMERICAS. The bylaws of PepsiAmericas may be repealed or amended, any
additional bylaws may be adopted, by either a vote of the full board of
directors or by a vote of the holders of all the issued and outstanding shares
entitled to vote, but the board of directors may not amend or repeal any bylaw
adopted by the shareholders if the shareholders specifically provide that the
bylaw is not subject to amendment or repeal by the directors.
BUSINESS COMBINATIONS WITH INTERESTED SHAREHOLDERS
GENERAL. Section 203 of the Delaware General Corporation Law, in general,
prohibits a business combination between a corporation and an interested
shareholder (a shareholder who, alone or with its affiliates, beneficially owns
at least 15% of a corporation's stock) within three years of the time such
shareholder became an interested shareholder, unless:
- prior to such time the board of directors of the corporation approved
either the business combination or the transaction that resulted in the
shareholder becoming an interested shareholder;
- upon consummation of the transaction that resulted in the shareholder
becoming an interested shareholder, the interested shareholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced, exclusive of shares owned by directors who are
also officers and by certain employee stock plans; or
- at or subsequent to such time, the business combination is approved by the
board of directors and authorized by the affirmative vote at a
shareholders' meeting of at least 66 2/3% of the outstanding voting stock
which is not owned by the interested shareholder.
These restrictions do not apply to corporations that have elected, in the manner
provided therein, not to be subject to Section 203 of the Delaware General
Corporation Law or, with certain exceptions, which do not have a class of voting
stock that is listed on a national securities exchange or authorized for
quotation on the Nasdaq or held of record by more than 2,000 shareholders.
Whitman has elected not to be governed by Section 203 of the Delaware General
Corporation Law. PepsiAmericas has not made a similar election.
RIGHTS AGREEMENT
WHITMAN. Each outstanding share of Whitman common stock includes, and each
share of common stock offered by this joint proxy statement/prospectus will
include, one preferred stock purchase right provided under the rights agreement.
If there is a public announcement that a person or group has become an
acquiring person (which is defined as the beneficial owner of 15% or more of all
outstanding shares of Whitman common stock) or ten business days after the
commencement or announcement of a tender or exchange offer which would result in
a person or group becoming an acquiring person, whichever is earlier, Whitman
will issue separate certificates which will represent the rights. After the
distribution of the rights certificates, each right may be exercised to purchase
from Whitman one one-hundredth of a share of Series A preferred stock for
$61.25, subject to adjustment. The Series A preferred stock is nonredeemable and
will have 100 votes per share (subject to adjustment). Whitman has reserved
2 million shares of Series A preferred stock for issuance upon exercise of the
rights.
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The rights agreement specifically excludes the following persons from
becoming an acquiring person and triggering the distribution of the rights:
- PepsiCo to the extent it owns shares of Whitman common stock acquired by
it in connection with the 1999 transaction, which is described under the
heading "Summary--The Companies--Whitman Corporation" or as permitted by
the shareholder agreement with PepsiCo, which is described under the
heading "Summary--PepsiCo Shareholder Agreement;" and
- any transferee who acquires beneficial ownership of Whitman common stock
from PepsiCo pursuant to the PepsiCo shareholder agreement.
As of August 18, 2000, the rights agreement was amended in order to exclude
Robert C. Pohlad, PepsiAmericas and the Pohlad Companies, as well as their
affiliates, from becoming an acquiring person solely because of this merger or
any permitted acquisitions as described in the shareholder agreement. For a more
complete description of this amendment, see "The Merger--Amendment to Whitman
Rights Agreement."
In the event that a person or group becomes an acquiring person, then each
right not owned by the acquiring person will entitle its holder to purchase a
limited number of shares of Whitman common stock at a 50% discount to the
then-current market price of Whitman common stock. If, after a person becomes an
acquiring person, Whitman is involved in a merger or other business combination
transaction or Whitman sells more than 50% of its assets or earning power, each
right will entitle the holder to purchase a limited number of shares of common
stock of the acquiring company at a 50% discount to the then-current market
price of that stock. The rights will have no voting rights and will expire ten
years from the date of the rights agreement. The Whitman board of directors may,
at any time after any person becomes an acquiring person and before that person
has become the beneficial owner of 50% or more of Whitman common stock then
outstanding, exchange each right for one share of Whitman common stock.
The Whitman board of directors may redeem all the rights for $0.01 per right
at any time before a person or group becomes an acquiring person. The rights
agreement may have the effect of deterring, delaying or preventing a takeover of
Whitman without the consent of the Whitman board of directors.
One right will be issued in respect of each share of common stock issued
before the earlier of May 20, 2009 or the redemption of the rights. As of the
date of this joint proxy statement/prospectus, the rights are not exercisable,
certificates representing the rights have not been issued and the rights
automatically trade with the Whitman common stock.
PEPSIAMERICAS. PepsiAmericas has not adopted a shareholder rights plan.
STOCK EXCHANGE LISTING; DELISTING AND DEREGISTRATION OF
PEPSIAMERICAS COMMON STOCK
It is a condition to the merger that the shares of Whitman common stock to
be issued in the merger be approved for listing on the NYSE and on the Chicago
and Pacific Stock Exchanges, subject to official notice of issuance. If the
merger is completed, the PepsiAmericas Class B common stock will no longer be
listed on the NYSE or any other exchange.
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EXPERTS
The consolidated financial statements of Whitman Corporation as of the end
of fiscal years 1999 and 1998 and for each of the fiscal years 1999, 1998 and
1997, have been incorporated by reference in this joint proxy
statement/prospectus in reliance upon the report of KPMG LLP, independent
certified public accountants, incorporated by reference, and upon the authority
of said firm as experts in accounting and auditing.
The consolidated financial statements and financial statement schedule of
PepsiAmericas, Inc. (formerly known as Pepsi-Cola Puerto Rico Bottling Company)
as of and for each of the periods ended December 31, 1999 and 1998, and
September 30, 1998, incorporated by reference in this joint proxy
statement/prospectus and the registration statement, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports with
respect thereto, and are included herein in reliance upon the authority of said
firm as experts in giving said reports.
The consolidated financial statements for the year ended September 30, 1997
and financial statement schedule as of and for the year ended September 30, 1997
of PepsiAmericas, Inc. (formerly known as Pepsi-Cola Puerto Rico Bottling
Company) have been incorporated by reference in this joint proxy
statement/prospectus in reliance upon the report of KPMG LLP, independent
certified public accountants, incorporated by reference, and upon the authority
of said firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the Whitman common stock to be issued in connection with the
merger will be passed upon by Steven R. Andrews, Esq., Senior Vice President,
Secretary and General Counsel of Whitman. Mr. Andrews is a participant in
Whitman's stock option plan and various other employee benefit plans offered to
employees of Whitman.
Sidley & Austin, counsel for Whitman, and Briggs and Morgan, P.A., counsel
for PepsiAmericas, will pass upon certain federal income tax consequences of the
merger for Whitman and PepsiAmericas, respectively.
SHAREHOLDER PROPOSALS FOR THE WHITMAN 2001 ANNUAL MEETING
Whitman's bylaws provide that in order for a shareholder to nominate a
candidate for election as a director at an annual meeting of shareholders or
propose business for consideration at such meeting, the shareholder must
generally notify Whitman in writing at the principal executive office of Whitman
not later than the close of business the 60th day nor earlier than the 90th day
prior to the meeting. Whitman's 2001 annual meeting is currently expected to be
held on May 3, 2001. Accordingly, a shareholder nomination or proposal intended
to be considered at Whitman's 2001 annual meeting must be received by Whitman's
Corporate Secretary on or after February 1, 2001, and on or prior to March 3,
2001. Proposals should be mailed to the Corporate Secretary, Whitman
Corporation, 3501 Algonquin Road, Rolling Meadows, Illinois 60008.
In addition, if you wish to have your proposal considered for inclusion in
Whitman's 2001 proxy statement, Whitman must receive your proposal on or before
November 23, 2000.
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SHAREHOLDER PROPOSALS FOR THE PEPSIAMERICAS 2001 ANNUAL MEETING
Due to the contemplated closing of the merger, PepsiAmericas does not
currently expect to hold a 2001 annual meeting of shareholders because,
following the merger, PepsiAmericas will not be a publicly-traded company. If
the merger is not consummated and the meeting is held and if a shareholder of
PepsiAmericas wishes to present a proposal for consideration for inclusion in
the proxy materials relating to the meeting, the proposal must be sent by
certified mail, return receipt requested, and must be received at the executive
offices of PepsiAmericas, 3800 Dain Rauscher Plaza, 60 South Sixth Street,
Minneapolis, Minnesota 55402, Attn: Secretary, no later than December 1, 2000.
All proposals must conform to the rules and regulations of the Securities and
Exchange Commission. Under Securities and Exchange Commission rules, if a
shareholder notifies PepsiAmericas after February 14, 2001 of his or her intent
to present a proposal for consideration at the meeting, PepsiAmericas, acting
through the persons named as proxies in the proxy materials for such meeting,
may exercise discretionary authority with respect to such proposal without
including information regarding such proposal in its proxy materials.
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WHERE YOU CAN FIND MORE INFORMATION
Whitman and PepsiAmericas file annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and copy any such
reports, statements or other information filed by either company at the
Securities and Exchange Commission's public reference room at 450 Fifth Street,
N.W., Washington, D.C. 20549. Please call the Securities and Exchange Commission
at 1-800-SEC-0330 for further information on the public reference room. The
filings of Whitman and PepsiAmericas with the SEC are also available to the
public from commercial document retrieval services and at the web site
maintained by the SEC at "http://www.sec.gov."
Whitman has filed a Registration Statement on Form S-4 to register with the
Securities and Exchange Commission the Whitman common stock to be issued to
PepsiAmericas shareholders in the merger. This document is a part of that
registration statement and constitutes a prospectus of Whitman in addition to
being a proxy statement of PepsiAmericas for the PepsiAmericas special meeting
and a proxy statement of Whitman for the Whitman special meeting. As allowed by
rules of the Securities and Exchange Commission, this document does not contain
all the information you can find in the registration statement or the exhibits
to the registration statement.
The SEC allows us to "incorporate by reference" information into this joint
proxy statement/ prospectus. This means that we can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is deemed to be part of this
joint proxy statement/prospectus, except for any information superseded by
information in this joint proxy statement/prospectus. This joint proxy
statement/prospectus incorporates important business and financial information
about Whitman and PepsiAmericas that is not included in or delivered with this
joint proxy statement/prospectus. This joint proxy statement/prospectus
incorporates by reference the documents set forth below that have previously
been filed with the SEC.
<TABLE>
<CAPTION>
WHITMAN SEC FILING
(FILE NO. 001-15019) PERIOD/FILE DATE
<S> <C>
Annual Report on Form 10-K Year ended January 1, 2000
Quarterly Reports on Form 10-Q Quarters ended April 1, 2000 and July 1, 2000
Current Report on Form 8-K Filed on August 23, 2000
PEPSIAMERICAS SEC FILING
(FILE NO. 001-13914) PERIOD/FILE DATE
Annual Report on Form 10-K Year ended December 31, 1999
Amendment No. 1 to Annual Report on Year ended December 31, 1999
Form 10-K/A
Quarterly Reports on Form 10-Q Quarters ended March 31, 2000 and June 30,
2000
Amendment to Quarterly Report on Form 10-Q/A Quarter ended March 31, 2000
Current Reports on Form 8-K Filed on August 24, 2000, August 29, 2000 and
September 7, 2000
</TABLE>
We are also incorporating by reference additional documents that Whitman and
PepsiAmericas file with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934 between the date of this joint proxy
statement/prospectus and the date of the special meetings.
Whitman has supplied all information contained or incorporated by reference
in this document relating to Whitman, and PepsiAmericas has supplied all
information contained or incorporated by reference in this document relating to
PepsiAmericas. Whitman and PepsiAmericas will send you the
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documents incorporated by reference without charge, excluding exhibits to the
information that is incorporated by reference, unless the exhibits have been
specifically incorporated by reference in this document.
Shareholders may obtain documents incorporated by reference in this document
without charge by requesting them in writing or by telephone from the
appropriate party at the following addresses:
<TABLE>
<S> <C>
Whitman Corporation PepsiAmericas, Inc.
3501 Algonquin Road 3800 Dain Rauscher Plaza
Rolling Meadows, Illinois 60008 60 South Sixth Street
Attention: Investor Relations Minneapolis, Minnesota 55402
Telephone: (847) [ ] Attention: Jean M. Giese
Telephone: (612) 661-3718
</TABLE>
IF YOU WOULD LIKE TO REQUEST DOCUMENTS, INCLUDING ANY DOCUMENTS WE MAY
SUBSEQUENTLY FILE WITH THE SECURITIES AND EXCHANGE COMMISSION BEFORE THE SPECIAL
MEETINGS, PLEASE DO SO BY [DATE], 2000 SO THAT YOU WILL RECEIVE THEM BEFORE THE
SPECIAL MEETINGS.
This joint proxy statement/prospectus does not constitute an offer to sell,
or a solicitation of an offer to purchase, the securities offered by this joint
proxy statement/prospectus, or the solicitation of a proxy, in any jurisdiction
to or from any person to whom or from whom it is unlawful to make such offer,
solicitation of an offer or proxy solicitation in such jurisdiction. Neither the
delivery of this joint proxy statement/prospectus nor any distribution of
securities pursuant to this joint proxy statement/ prospectus shall, under any
circumstances, create any implication that there has been no change in the
information set forth or incorporated into this joint proxy statement/prospectus
by reference or in our affairs since the date of this joint proxy
statement/prospectus.
You should rely only on the information contained or incorporated by
reference in this joint proxy statement/prospectus to vote on the merger. We
have not authorized anyone to provide you with information that is different
from what is contained in this joint proxy statement/prospectus. This joint
proxy statement/prospectus is dated [date], 2000. You should not assume that the
information contained in this joint proxy statement/prospectus is accurate as of
any date other than such date, and neither the mailing of the joint proxy
statement/prospectus to shareholders nor the issuance of Whitman common stock in
the merger shall create any implication to the contrary.
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ANNEX A
--------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
Among
WHITMAN CORPORATION,
ANCHOR MERGER SUB, INC.
and
PEPSIAMERICAS, INC.
Dated as of August 18, 2000
--------------------------------------------------------------------------------
<PAGE>
ARTICLE I DEFINITIONS
ARTICLE II THE MERGER
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SECTION 2.1. The Merger.................................................. 8
SECTION 2.2. Effective Time.............................................. 8
SECTION 2.3. Closing..................................................... 8
SECTION 2.4. Certificate of Incorporation and By-Laws.................... 8
SECTION 2.5. Directors................................................... 8
SECTION 2.6. Officers.................................................... 8
ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL STOCK OF MERGER SUB
AND THE COMPANY; EXCHANGE OF CERTIFICATES
SECTION 3.1. Effect of the Merger on Capital Stock....................... 9
SECTION 3.2. Exchange of Certificates.................................... 12
SECTION 3.3. Options and Warrants........................................ 14
SECTION 3.4. Transfer of Shares after the Effective Time................. 14
SECTION 3.5. Escheat..................................................... 14
ARTICLE IV CONTINGENT PAYMENTS
SECTION 4.1. Target Performance Criteria................................. 15
SECTION 4.2. Determination of Contingent Payments........................ 15
SECTION 4.3. Delivery of Contingent Payment Shares....................... 17
SECTION 4.4. Affiliated Transactions Committee........................... 17
SECTION 4.5. Assignability; Ordinary Course.............................. 18
SECTION 4.6. Time Limit.................................................. 18
SECTION 4.7. Option to Purchase Additional Parent Common Shares.......... 18
SECTION 4.8. Definitions................................................. 19
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 5.1. Organization................................................ 20
SECTION 5.2. Subsidiaries................................................ 20
SECTION 5.3. Capitalization.............................................. 20
SECTION 5.4. Authority................................................... 22
SECTION 5.5. Consents and Approvals; Violations.......................... 22
SECTION 5.6. SEC Reports and Financial Statements........................ 23
SECTION 5.7. Absence of Certain Changes or Events........................ 23
SECTION 5.8. No Undisclosed Liabilities.................................. 23
SECTION 5.9. Employee Benefit Plans, Labor Matters....................... 24
SECTION 5.10. Contracts; Indebtedness..................................... 26
SECTION 5.11. Litigation.................................................. 26
SECTION 5.12. Compliance with Applicable Law.............................. 26
SECTION 5.13. Taxes....................................................... 27
SECTION 5.14. Environmental Matters....................................... 28
SECTION 5.15. Intellectual Property....................................... 28
SECTION 5.16. Real Property............................................... 28
SECTION 5.17. Title Insurance............................................. 29
SECTION 5.18. Required Vote............................................... 29
SECTION 5.19. Brokers, Schedule of Fees and Expense....................... 29
SECTION 5.20. Opinion of Financial Advisors............................... 29
</TABLE>
A-i
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<TABLE>
<CAPTION>
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ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB
SECTION 6.1. Organization................................................ 29
SECTION 6.2. Subsidiaries................................................ 30
SECTION 6.3. Capitalization.............................................. 30
SECTION 6.4. Authority................................................... 31
SECTION 6.5. Consents and Approvals, No Violations....................... 31
SECTION 6.6. SEC Reports and Financial Statements........................ 32
SECTION 6.7. Absence of Certain Changes or Events........................ 32
SECTION 6.8. No Undisclosed Liabilities.................................. 32
SECTION 6.9. Employee Benefit Plans, Labor Matters....................... 33
SECTION 6.10. Contracts; Indebtedness..................................... 34
SECTION 6.11. Litigation.................................................. 35
SECTION 6.12. Compliance with Applicable Law.............................. 35
SECTION 6.13. Taxes....................................................... 36
SECTION 6.14. Environmental Matters....................................... 36
SECTION 6.15. Intellectual Property....................................... 37
SECTION 6.16. Real Property............................................... 37
SECTION 6.17. Title Insurance............................................. 37
SECTION 6.18. Required Vote............................................... 37
SECTION 6.19. Brokers, Schedule of Fees and Expense....................... 37
SECTION 6.20. Opinion of Financial Advisor................................ 38
SECTION 6.21. Merger Sub.................................................. 38
ARTICLE VII COVENANTS
SECTION 7.1. Company Interim Operations.................................. 38
SECTION 7.2 Parent Interim Operations................................... 41
SECTION 7.3. No Solicitation............................................. 43
SECTION 7.4. Third Party Standstill Agreements........................... 44
SECTION 7.5. Certain Litigation.......................................... 44
SECTION 7.6. Indemnification; Directors' and Officers' Insurance......... 44
SECTION 7.7. Listing of Parent Common Shares............................. 45
SECTION 7.8. Employee Benefits........................................... 45
SECTION 7.9. Payment of Dividends........................................ 46
ARTICLE VIII ADDITIONAL ARRANGEMENTS
SECTION 8.1. Registration Statement, Proxy Statement..................... 46
SECTION 8.2. Stockholders' Meetings...................................... 48
SECTION 8.3. Access to Information....................................... 48
SECTION 8.4. Reasonable Best Efforts..................................... 48
SECTION 8.5. Notices of Certain Events................................... 49
SECTION 8.6. Tax-Free Reorganization..................................... 49
SECTION 8.7. Public Announcements........................................ 49
SECTION 8.8. Affiliates of the Company................................... 49
SECTION 8.9. Board of Directors; Chief Executive Officer of Parent....... 49
SECTION 8.10. Amendment of PepsiCo Shareholder Agreement and Parent
By-Laws; Pohlad Companies Shareholder Agreement............. 50
SECTION 8.11. Redemption of Series AA Preferred Stock..................... 50
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
ARTICLE IX CONDITIONS PRECEDENT
SECTION 9.1. Conditions to Each Party's Obligation To Effect the
Merger...................................................... 50
SECTION 9.2. Conditions to the Company's Obligation to Effect the
Merger...................................................... 51
SECTION 9.3. Conditions to Parent's and Merger Sub's Obligation to Effect
the Merger.................................................. 52
ARTICLE X TERMINATION
SECTION 10.1. Termination................................................. 53
SECTION 10.2. Effect of Termination....................................... 53
SECTION 10.3. Fees and Expenses........................................... 54
ARTICLE XI MISCELLANEOUS
SECTION 11.1. Survival of Representations and Warranties.................. 54
SECTION 11.2. Notices..................................................... 54
SECTION 11.3. Amendment................................................... 55
SECTION 11.4. Extension, Waiver........................................... 55
SECTION 11.5. Interpretation.............................................. 55
SECTION 11.6. Counterparts................................................ 55
SECTION 11.7. Entire Agreement, No Third Party Beneficiaries.............. 55
SECTION 11.8. Governing Law............................................... 55
SECTION 11.9. Assignment.................................................. 55
SECTION 11.10. Enforcement................................................. 56
SECTION 11.11. Severability................................................ 56
SECTION 11.12. WAIVER OF JURY TRIAL........................................ 56
EXHIBITS
Exhibit A Form of Company Stockholder Voting Agreement
Exhibit B Form of Parent Stockholder Voting Agreement
Exhibit C Form of Rule 145 Affiliate Agreement
Exhibit D Form of Amended and Restated PepsiCo Shareholder Agreement
Exhibit E Form of Amendment to Parent By-laws
Exhibit F Form of Pohlad Companies Shareholder Agreement
</TABLE>
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<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 18, 2000 (this
"AGREEMENT"), among Whitman Corporation, a Delaware corporation ("PARENT"),
Anchor Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of
Parent ("MERGER SUB"), and PepsiAmericas, Inc., a Delaware corporation (the
"COMPANY").
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have determined that it is advisable and in the best interests of their
respective stockholders for the Company to merge with and into Merger Sub, upon
the terms and subject to the conditions of this Agreement (the "MERGER");
WHEREAS, the respective Boards of Directors of Parent and the Company have
determined that the Merger is in furtherance of and consistent with their
respective business strategies and is in the best interest of their respective
stockholders, and Parent has approved this Agreement and the Merger as the sole
stockholder of Merger Sub;
WHEREAS, for United States federal income tax purposes, it is intended that
the Merger shall qualify as a tax-free reorganization within the meaning of
Section 368 of the Code;
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger;
WHEREAS, Parent and Merger Sub have required, as a condition to their
willingness to enter into this Agreement, that certain stockholders of the
Company enter into a Voting Agreement (the "COMPANY STOCKHOLDER VOTING
AGREEMENT") with Parent and Merger Sub, substantially in the form attached
hereto as EXHIBIT A, concurrently with the execution and delivery of this
Agreement; and
WHEREAS, the Company has required, as a condition to its willingness to
enter into this Agreement, that certain stockholders of Parent enter into a
Voting Agreement (the "PARENT STOCKHOLDER VOTING AGREEMENT") with the Company,
substantially in the form attached hereto as EXHIBIT B, concurrently with the
execution and delivery of this Agreement.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements set forth herein, Parent, Merger Sub and the Company
hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the respective
meanings set forth below:
"ACCOUNTING FIRM": As defined in SECTION 4.8.
"ADJUSTED EBITDA": As defined in SECTION 4.8.
"AFFILIATE": As defined in Rule 12b-2 under the Exchange Act.
"AFFILIATED TRANSACTION COMMITTEE": The Affiliated Transaction Committee of
the Board of Directors of Parent established in accordance with the by-laws of
Parent.
"AGGREGATE ADJUSTED EBITDA": As defined in SECTION 4.8.
"AGGREGATE CONTINGENT PAYMENT": As defined in SECTION 4.1(C).
"AGREED ADJUSTMENTS": As defined in SECTION 4.2(C).
"AGREEMENT": As defined in the Preamble.
"AMENDED AND RESTATED PEPSICO SHAREHOLDER AGREEMENT": As defined in
SECTION 8.10(A).
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"AUTHORIZATION": As defined in SECTION 5.5.
"BENEFIT PLANS": As defined in SECTION 7.8(B).
"BLUE SKY LAWS": As defined in SECTION 5.5.
"CASH CONSIDERATION": As defined in SECTION 3.1(C)(I).
"CASH ELECTION": As defined in SECTION 3.1(D).
"CASH ELECTION NUMBER": As defined in SECTION 3.1(D).
"CASH ELECTION SHARE": As defined in SECTION 3.1(D).
"CASH FRACTION": As defined in SECTION 3.1(E).
"CERTIFICATE OF MERGER": The certificate of merger with respect to the
Merger, containing the provisions required by, and executed in accordance with,
Section 251 of the DGCL.
"CLAIM": As defined in SECTION 7.6(A).
"CLOSING": The closing of the Merger.
"CLOSING DATE": The date on which the Closing occurs.
"CODE": The Internal Revenue Code of 1986, as amended, and all regulations
promulgated thereunder, as in effect from time to time.
"COMPANY": As defined in the Preamble.
"COMPANY BENEFIT PLANS": As defined in SECTION 5.9(A).
"COMPANY CHARTER": The Amended and Restated Certificate of Incorporation of
the Company, as amended to the date hereof.
"COMPANY CLASS A COMMON SHARES": Shares of Class A Common Stock, par value
$.01 per share, of the Company.
"COMPANY CLASS B COMMON SHARES": Shares of Class B Common Stock, par value
$.01 per share, of the Company.
"COMPANY COMMON CERTIFICATES": As defined in SECTION 3.L(H).
"COMPANY COMMON SHARES": Company Class A Common Shares and Company Class B
Common Shares.
"COMPANY DISCLOSURE STATEMENT": The disclosure statement, dated the date of
this Agreement, delivered by the Company to Parent.
"COMPANY EMPLOYEES": As defined in SECTION 7.8(A).
"COMPANY FINANCIAL ADVISOR": As defined in SECTION 5.19.
"COMPANY LEASES": As defined in SECTION 5.16.
"COMPANY OPTION": As defined in SECTION 3.3(A).
"COMPANY OWNED REAL PROPERTY": As defined in SECTION 5.16.
"COMPANY PERMITS": As defined in SECTION 5.12(A).
"COMPANY PERMITTED LIENS": All (i) matters listed or described in
SECTION 5.16 of the Company Disclosure Statement, (ii) easements, covenants,
rights-of-way and other Liens or restrictions which do not, individually or in
the aggregate, materially detract from the value or impair the present and
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continued use, operation and maintenance of the property subject thereto, or
impair the operation of the Company or any of its Subsidiaries and (iii) real
estate taxes not yet due or payable.
"COMPANY REAL PROPERTY": As defined in SECTION 5.16.
"COMPANY SEC REPORTS": As defined in SECTION 5.6.
"COMPANY STOCKHOLDER APPROVAL": As defined in SECTION 5.4(A).
"COMPANY STOCKHOLDERS' MEETING": As defined in SECTION 8.2(A).
"COMPANY STOCKHOLDER VOTING AGREEMENT": As defined in the Preamble.
"COMPANY TAX CERTIFICATE": As defined in SECTION 9.2(C).
"COMPANY TITLE POLICIES": As defined in SECTION 5.17.
"COMPANY WARRANT": As defined in SECTION 3.3(B).
"CONFIDENTIALITY AGREEMENT": The Confidentiality Agreement, dated as of
March 1, 2000, between Parent and the Company.
"CONTINGENT EARNOUT EXCHANGE RATIO" means the number, rounded down to the
nearest ten-thousandth, equal to the Exchange Ratio MULTIPLIED BY 0.1316;
PROVIDED, that in the event Parent (i) changes (or establishes a record date for
changing) the number of Parent Common Shares issued and outstanding prior to a
Contingent Share Earned Date as a result of a stock split, stock dividend, stock
combination, recapitalization, reclassification, reorganization or similar
transaction with respect to the outstanding Parent Common Shares or (ii) pays or
makes an extraordinary dividend or distribution in respect of Parent Common
Shares (other than a distribution referred to in clause (i) of this sentence)
and, in either case, the record date therefor shall be after the Effective Time
but prior to a Contingent Share Earned Date, the Contingent Earnout Exchange
Ratio shall be proportionately adjusted. Regular periodic cash dividends and
increases thereon consistent with past practices shall not be considered
extraordinary for purposes of the preceding sentence.
"CONTINGENT PAYMENT CONSIDERATION": As defined in SECTION 3.1(C)(III).
"CONTINGENT PAYMENT ELECTION": As defined in SECTION 3.1(G).
"CONTINGENT PAYMENT RECORD HOLDER": As defined in ARTICLE IV.
"CONTINGENT PAYMENTS": As defined in SECTION 4.1(C).
"CONTINGENT SHARE DELIVERY DATE": As defined in SECTION 4.8.
"CONTINGENT SHARE EARNED DATE": As defined in SECTION 4.8.
"CONTRACT": As defined in SECTION 5.5.
"CONTROL": With respect to any Person, the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract, or
otherwise.
"DGCL": The General Corporation Law of the State of Delaware.
"DAKOTA HOLDINGS": Dakota Holdings, LLC, a Delaware limited liability
company.
"DISSENTING SHARES": As defined in SECTION 3.L(L).
"EFFECTIVE TIME": As defined in SECTION 2.2.
"ELECTION": As defined in SECTION 3.1(G).
"ELECTION DEADLINE": As defined in SECTION 3.1(J).
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"ENVIRONMENTAL LAW": Any Law relating to any matter of pollution, protection
of the environment, environmental regulation or control or regarding Hazardous
Substances on, under or emanating from any of the Company's or Parent's
properties, as applicable, or any of their respective Subsidiaries' properties
or any other properties.
"ERISA": As defined in SECTION 5.9(A).
"EXCESS PARENT COMMON SHARES": As defined in SECTION 3.2(D).
"EXCHANGE ACT": The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
"EXCHANGE AGENT": As defined in SECTION 3.2(A).
"EXCHANGE RATIO": The number, rounded down to the nearest ten-thousandth,
equal to $3.80 DIVIDED BY the Parent Closing Price; PROVIDED, HOWEVER, (i) if
the Parent Closing Price exceeds $16.0738, then the Exchange Ratio shall be
0.2364 and (ii) if the Parent Closing Price is less than $13.1513, then the
Exchange Ratio shall be 0.2889.
"EXECUTIVE AGREEMENTS": As defined in SECTION 7.8(C).
"FIXED EARNOUT EXCHANGE RATIO": The number, rounded down to the nearest
ten-thousandth, equal to the Exchange Ratio MULTIPLIED BY 0.7368.
"FORM OF ELECTION": As defined in SECTION 3.1(D).
"GAAP": As defined in SECTION 5.6.
"GOVERNMENTAL ENTITY": As defined in SECTION 5.5.
"HAZARDOUS SUBSTANCE": Any toxic or hazardous materials or substances,
including asbestos, contaminants, pollutants, chemicals, flammable explosives,
radioactive materials, petroleum and petroleum products and any substances
defined as, or included in the definition of, "hazardous substances," "hazardous
wastes," "hazardous materials" or "toxic substances" under any Environmental
Law.
"HSR ACT": As defined in SECTION 5.5.
"INDEMNIFIED PARTIES": As defined in SECTION 7.6(A).
"INDEPENDENT AUDITORS": KPMG LLP or such other nationally recognized
accounting firm appointed by the Board of Directors of Parent from time to time
as the auditors of Parent.
"INTELLECTUAL PROPERTY": All industrial and intellectual property rights,
including Proprietary Technology, patents, patent applications, patent rights,
trademarks, trademark applications, trademark rights, trade names, trade name
rights and registrations, service marks, service mark applications, service mark
rights and registrations, copyrights, know-how, licenses, trade secrets,
proprietary processes, formulae and customer lists.
"IRS": As defined in SECTION 5.9(A).
"LAW": Any federal, state, local or foreign law, statute, code, ordinance,
rule, regulation promulgated, or order, judgment, writ, stipulation, award,
injunction or decree entered, by a Governmental Entity.
"LIENS": As defined in SECTION 5.2.
"LOSSES AND EXPENSES": Any and all losses, costs, obligations, liabilities,
settlement payments, awards, judgments, fines, penalties, damages, expenses,
monetary deficiencies or other charges (including reasonable attorneys' fees and
expenses).
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"MATERIAL ADVERSE EFFECT": With respect to Parent, a material adverse effect
on the business, properties, operations, condition (financial or otherwise) or
prospects of Parent and its Subsidiaries, taken as a whole. With respect to the
Company, a material adverse effect on the business, properties, operations,
condition (financial or otherwise) or prospects of the Company and its
Subsidiaries, taken as a whole.
"MATERIAL COMPANY CONTRACTS": As defined in SECTION 5.10(A).
"MATERIAL PARENT CONTRACTS": As defined in SECTION 6.10(A).
"MEASUREMENT PERIOD": As defined in SECTION 4.8.
"MERGER": As defined in the Preamble.
"MERGER CONSIDERATION": As defined in SECTION 3.1(C)(III).
"MERGER SUB": As defined in the Preamble.
"MULTIEMPLOYER PLAN": As defined in SECTION 5.9(B).
"MULTIPLE EMPLOYER PLAN": As defined in SECTION 5.9(B).
"NO ELECTION SHARES": As defined in SECTION 3.1(I).
"NYSE": The New York Stock Exchange.
"PARENT": As defined in the Preamble.
"PARENT BENEFIT PLANS": As defined in SECTION 6.9(A).
"PARENT COMMON SHARES": Shares of common stock, par value $.01 per share, of
Parent.
"PARENT CLOSING PRICE": The average of the per share closing prices of the
Parent Common Shares, as reported in the NYSE Composite Transactions, during the
fifteen (15) consecutive trading days ending five trading days immediately prior
to the earlier of (i) the Company Stockholders' Meeting or (ii) the Parent
Stockholders' Meeting.
"PARENT DISCLOSURE STATEMENT": The disclosure statement, dated the date of
this Agreement, delivered by Parent to the Company.
"PARENT FINANCIAL ADVISOR": As defined in SECTION 6.19.
"PARENT LEASES": As defined in SECTION 6.16.
"PARENT OPTION": As defined in SECTION 3.3(A).
"PARENT OWNED REAL PROPERTY": As defined in SECTION 6.16.
"PARENT PERMITS": As defined in SECTION 6.12(A).
"PARENT PERMITTED LIENS": All (i) matters listed or described in
SECTION 6.16 of the Parent Disclosure Statement, (ii) easements, covenants,
rights-of-way and other Liens or restrictions which do not, individually or in
the aggregate, materially detract from the value or impair the present and
continued use, operation and maintenance of the property subject thereto, or
impair the operation of Parent or any of its Subsidiaries and (iii) real estate
taxes not yet due or payable.
"PARENT PREFERRED SHARES": As defined in SECTION 6.3.
"PARENT REAL PROPERTY": As defined in SECTION 6.16.
"PARENT REFERENCE PRICE": $14.6125.
"PARENT RIGHTS AGREEMENT": The Rights Agreement, dated as of May 20, 1999,
by and between Parent and First Chicago Trust Company of New York, as Rights
Agent.
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"PARENT SEC REPORTS": As defined in SECTION 6.6.
"PARENT STOCKHOLDER APPROVAL": As defined in SECTION 6.4.
"PARENT STOCKHOLDER VOTING AGREEMENT": As defined in the Preamble.
"PARENT STOCKHOLDERS' MEETING": As defined in SECTION 8.2(B).
"PARENT STOCK INCENTIVE PLANS": As defined in SECTION 6.3.
"PARENT TAX CERTIFICATE": As defined in SECTION 9.2(C).
"PARENT TITLE POLICIES": As defined in SECTION 6.17.
"PARENT WARRANT": As defined in SECTION 3.3(B).
"PBGC": As defined in SECTION 5.9(B).
"PEPSICO": PepsiCo, Inc, a North Carolina corporation.
"PERMIT": Any permit, grant, authorization, exception, consent, certificate,
clearance, license, variance, exemption, order, concession, franchise and
approval of a Governmental Entity.
"PERSON": Any individual or corporation, company, partnership, trust,
incorporated or unincorporated association, joint venture or other entity of any
kind.
"POHLAD COMPANIES": Pohlad Companies, a Minnesota corporation.
"POHLAD COMPANIES SHAREHOLDER AGREEMENT": As defined in SECTION 8.10(C).
"PRELIMINARY CONTINGENT PAYMENT REPORT": As defined in SECTION 4.2(A).
"PROPRIETARY TECHNOLOGY": All proprietary processes, formulae, inventions,
trade secrets, know-how, development tools and other proprietary rights used by
the Company and its Subsidiaries or Parent and its Subsidiaries, as the case may
be, pertaining to any product, software or service manufactured, marketed,
licensed or sold by the Company and its Subsidiaries or Parent and its
Subsidiaries, as the case may be, in the conduct of their business or used or
employed in the development, license, sale, marketing, distribution or
maintenance thereof, and all documentation and media constituting, describing or
relating to the above, including manuals, memoranda, know-how, notebooks,
software, records and disclosures.
"PROXY STATEMENT": As defined in SECTION 8.1(A).
"REGISTRATION STATEMENT": As defined in SECTION 8.1(A).
"REPRESENTATIVES": As defined in SECTION 8.3.
"RIGHTS": Parent's preferred share purchase rights issued pursuant to the
Parent Rights Agreement for so long as the Parent Rights Agreement or any
replacement or alternative rights plan is in existence.
"RULE 145 AFFILIATE": As defined in SECTION 8.8.
"SCHEDULE 13E-3": As defined in SECTION 8.1(A).
"SEC": The Securities and Exchange Commission.
"SECTION 16": As defined in SECTION 7.8(B).
"SECURITIES ACT": The Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
"SHAREHOLDER TAX CERTIFICATE": As defined in SECTION 9.2(C).
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"SHARE ISSUANCE": As defined in SECTION 6.4.
"SHARES REPRESENTATIVES": As defined in SECTION 3.1(D).
"SPECIAL COMMITTEE FINANCIAL ADVISOR": As defined in SECTION 5.19.
"STOCK CONSIDERATION": As defined in SECTION 3.1(C)(II).
"STOCK ELECTION": As defined in SECTION 3.1(F).
"SUBSCRIPTION SHARES": 1,710,863 shares of Parent Common Stock made
available for purchase by Contingent Payment Record Holders pursuant to
SECTION 4.7.
"SUBSCRIPTION SHARE PURCHASE RATE": That number, rounded down to the nearest
ten-thousandth, equal to the number of Subscription Shares DIVIDED BY the
aggregate number of Company Common Shares in respect of which Contingent Payment
Elections have been made.
"SUBSIDIARY": As to any Person, any other Person of which such first Person
(either alone or through or together with any other Subsidiary) owns, directly
or indirectly, a majority of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the Board of Directors
or other governing body of such Person.
"SUPERIOR PROPOSAL": Any bona fide written proposal or offer made by a third
party to acquire, directly or indirectly, for consideration consisting of cash
and/or securities, more than 50% of the voting power of voting securities or
equity interests of, or all or substantially all of the assets (on a
consolidated basis) of, the Company or Parent, as the case may be, on terms
which the Board of Directors of the Company or Parent, as the case may be,
determines in its good faith judgment (after consultation with a financial
advisor of nationally recognized reputation) to be more favorable to the Company
or Parent, as the case may be, and its respective stockholders than the Merger
and for which financing, to the extent required, is then fully committed or
which, in the good faith judgment of the Board of Directors of the Company or
Parent, as the case may be, (based on the advice of a financial advisor of
nationally recognized reputation) is reasonably capable of being financed by
such third party.
"SURVIVING CORPORATION": As defined in SECTION 2.1.
"TAKEOVER PROPOSAL": Any proposal for a merger, consolidation, share
exchange, business combination or other similar transaction involving the
Company or Parent, as the case may be, or any proposal or offer to acquire,
directly or indirectly, 20% or more of the voting power of voting securities or
equity interests of, or 20% or more in value of the assets (on a consolidated
basis) of, the Company or Parent, as the case may be, other than the
transactions contemplated by this Agreement.
"TAX": Any United States federal, state, county or local, or foreign or
provincial income, gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, value added, alternative or added minimum, ad
valorem or transfer tax, or any other tax, custom, duty or governmental fee or
other like assessment or charge of any kind whatsoever, together with any
interest or penalty imposed by any Governmental Entity.
"TAX RETURN": A report, return or other information (including any attached
schedules or any amendments to such report, return or other information)
required to be supplied to or filed with a Governmental Entity with respect to
any Tax, including an information return, claim for refund, amended return or
declaration of estimated Tax.
"TREASURY REGULATIONS": The regulations promulgated by the U.S. Treasury
Department pursuant to the Code.
"2001 ADJUSTED EBITDA": As defined in SECTION 4.8.
"2002 ADJUSTED EBITDA": As defined in SECTION 4.8.
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"2001 CONTINGENT PAYMENT": As defined in SECTION 4.1(A).
"2002 CONTINGENT PAYMENT": As defined in SECTION 4.1(B).
"368 REORGANIZATION": As defined in SECTION 8.6.
"WHOLLY OWNED SUBSIDIARY": As to any Person, a Subsidiary of such Person all
of the equity and voting interest in which is owned, directly or indirectly, by
such Person.
ARTICLE II
THE MERGER
SECTION 2.1. THE MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time, the Company shall be merged with and into
Merger Sub in accordance with the provisions of Section 251 of the DGCL and with
the effect provided in the DGCL. The separate corporate existence of the Company
shall thereupon cease, and Merger Sub shall be the surviving corporation in the
Merger (the "SURVIVING CORPORATION") and shall continue its corporate existence
as a Subsidiary of Parent and shall continue to be governed by the laws of the
State of Delaware.
SECTION 2.2. EFFECTIVE TIME. The Merger shall become effective on the date
and at the time (the "EFFECTIVE TIME") that the Certificate of Merger shall have
been accepted for filing by the Secretary of State of the State of Delaware (or
such later date and time as may be specified in the Certificate of Merger),
which shall be on the Closing Date.
SECTION 2.3. CLOSING. Subject to the fulfillment or waiver of the conditions
set forth in Article IX, the Closing shall take place (a) at the offices of
Sidley & Austin, Bank One Plaza, 10 S. Dearborn Street, Chicago, Illinois, at
10:00 a.m. on the earliest practicable date (but no later than the fifth
business day) following the satisfaction or waiver of the conditions set forth
in ARTICLE IX (other than those conditions to be satisfied or waived at the
Closing) or (b) at such other place and/or time and/or on such other date as
Parent, Merger Sub and the Company may agree.
SECTION 2.4. Certificate of Incorporation and By-Laws.
(a) Subject to SECTION 7.6(B), at the Effective Time, the certificate of
incorporation of Merger Sub as in effect immediately prior to the
Effective Time shall be the certificate of incorporation of the Surviving
Corporation, until duly amended in accordance with the terms thereof and
of the DGCL, except that Article FIRST thereof shall read as follows:
"The name of the Corporation (which is hereinafter called the
"Corporation') is PepsiAmericas, Inc."
(b) Subject to SECTION 7.6(B), the by-laws of Merger Sub as in effect
immediately prior to the Effective Time shall be the by-laws of the
Surviving Corporation, until duly amended in accordance with the terms
thereof, of the certificate of incorporation of the Surviving Corporation
and of the DGCL.
SECTION 2.5. DIRECTORS. The directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
SECTION 2.6. OFFICERS. The officers of Merger Sub immediately prior to the
Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
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ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF MERGER SUB AND THE
COMPANY; EXCHANGE OF CERTIFICATES
SECTION 3.1. EFFECT OF THE MERGER ON CAPITAL STOCK. At the Effective Time,
by virtue of the Merger and without any action on the part of any holder of any
capital stock of the Company or Merger Sub:
(a) SHARES OF MERGER SUB COMMON STOCK. Each share of common stock, par value
$.01 per share, of Merger Sub that is issued and outstanding immediately
prior to the Effective Time shall remain outstanding, unchanged by reason
of the Merger, as one fully paid and nonassessable share of common stock,
par value $.01 per share, of the Surviving Corporation.
(b) CANCELLATION OF CERTAIN COMPANY COMMON STOCK. Each Company Common Share
that is held in the treasury of the Company or that is owned by Parent or
any of its Wholly Owned Subsidiaries shall be canceled and shall cease to
exist, and no capital stock of Parent or other consideration shall be
delivered in exchange therefor.
(c) CONVERSION OF COMPANY COMMON SHARES OWNED BY PUBLIC. Subject to the
provisions of this SECTION 3.1, each Company Common Share issued and
outstanding immediately prior to the Effective Time, other than
Dissenting Shares, shares canceled pursuant to SECTION 3.1(B) and shares
held by Dakota Holdings or Pohlad Companies (which shares shall be
converted solely as provided in Section 3.1(c)(iii)), shall be converted
into the right to receive:
(i) subject to SECTION 3.1(E), an amount in cash equal to the Exchange
Ratio MULTIPLIED BY the Parent Closing Price (the "CASH
CONSIDERATION"); or
(ii) the number of Parent Common Shares (together with the associated
Rights) equal to the Exchange Ratio (the "STOCK CONSIDERATION"); or
(iii) (A) the number of Parent Common Shares (together with the
associated Rights) equal to the Fixed Earnout Exchange Ratio PLUS
(B) the right to receive the Contingent Payments described in
ARTICLE IV (the "CONTINGENT PAYMENT CONSIDERATION" and together
with the Cash Consideration and the Stock Consideration, the
"MERGER CONSIDERATION").
For purposes of clarity, each record holder of Company Common Shares
entitled to make an Election pursuant to this SECTION 3.1 may make a Cash
Election, Stock Election or Contingent Payment Election, or any combination
thereof, with respect to the Company Common Shares owned by such record holder,
PROVIDED, that the sum of all Elections made by such record holder equals 100%
of such record holder's Company Common Shares and that each Election is for a
whole number of Company Common Shares and not a fractional share.
(d) CASH ELECTION. Subject to the provisions of this SECTION 3.1(D) and
SECTION 3.1(E), each record holder of Company Common Shares immediately
prior to the Effective Time (other than Dakota Holdings and Pohlad
Companies) shall be entitled to elect to receive the Cash Consideration
(a "CASH ELECTION") for all or any part of such holder's Company Common
Shares (each, a "CASH ELECTION SHARE"). Cash Elections shall be made on a
form designed for that purpose, which shall include a letter of
transmittal (a "FORM OF ELECTION"). A holder of record of Company Common
Shares who holds such Company Common Shares as nominee, trustee or in
another representative capacity (a "SHARES REPRESENTATIVE") may submit
multiple Forms of Election; provided that such Shares Representative
certifies that each such Form of Election covers all the Company Common
Shares held by such Shares Representative for each particular beneficial
owner whose Company Common Shares are covered by such Form of Election.
Notwithstanding the foregoing, the aggregate number of Company Common
Shares
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that may be converted in the Merger into the right to receive Cash
Consideration (rounded down to the nearest whole share, the "CASH
ELECTION NUMBER") shall not exceed the lesser of:
(i) a number equal to (A) the product of 50% MULTIPLIED BY the total
number of Company Common Shares issued and outstanding immediately
prior to the Effective Time MINUS (B) the number of Dissenting
Shares; and
(ii) the number which would cause the ratio of the value of the
aggregate Stock Consideration to be issued in the Merger to the
value of the aggregate Merger Consideration to be less than 0.50
(assuming, for these purposes, that no Contingent Payments will be
made), such ratio to be equal to a fraction, the numerator of which
is equal to (A) the per share closing price of the Parent Common
Shares, as reported in the NYSE Composite Transactions, on the
Closing Date MULTIPLIED BY the aggregate number of Parent Common
Shares to be paid as Merger Consideration pursuant to SECTION 3.1
(assuming, for these purposes, that no Contingent Payments will be
made), and the denominator of which is equal to (B) the sum of
(1) the amount set forth in the preceding clause (A) PLUS (2) the
aggregate Cash Consideration to be issued pursuant to Section 3.1
PLUS (3) the number of Dissenting Shares MULTIPLIED BY the greater
of the Cash Consideration or $3.80 PLUS (4) any other amounts paid
by Parent or the Company (or any affiliate thereof) to, or on
behalf of, any stockholder of the Company in connection with the
sale, redemption or other disposition of any Company stock in
connection with the Merger for purposes of Treasury Regulation
Sections 1.368-1(e) and 1.368-1T(e) PLUS (5) any extraordinary
dividend distributed by the Company prior to and in connection with
the Merger for purposes of Treasury Regulation Sections 1.368-1(e)
and 1.368-1T(e).
(e) PRORATION OF COMPANY COMMON SHARES. If the aggregate number of Company
Common Shares in respect of which Cash Elections have been made exceeds
the Cash Election Number, each Cash Election Share shall be converted
into (i) the right to receive an amount in cash, without interest, equal
to the product of (A) the Cash Consideration and (B) a fraction (the
"CASH FRACTION"), the numerator of which shall be the Cash Election
Number and the denominator of which shall be the total number of Cash
Election Shares, and (ii) a number of Parent Common Shares equal to the
product of (A) the Exchange Ratio and (B) a fraction equal to one MINUS
the Cash Fraction.
(f) STOCK ELECTION. Each record holder of Company Common Shares immediately
prior to the Effective Time (other than Dakota Holdings and Pohlad
Companies) shall be entitled to elect to receive Parent Common Shares
(together with the associated Rights) for all or any part of such
holder's Company Common Shares (a "STOCK ELECTION"). Stock Elections
shall be made on a Form of Election. A Shares Representative may submit
multiple Forms of Election; PROVIDED that such Shares Representative
certifies that each such Form of Election covers all the Company Common
Shares held by such Shares Representatives for each beneficial owner
whose Company Common Shares are covered by such Form of Election.
(g) CONTINGENT PAYMENT ELECTION. Each record holder of Company Common Shares
immediately prior to the Effective Time shall be entitled to elect to
receive the Contingent Payment Consideration for all or any part of such
holder's Company Common Shares (a "CONTINGENT PAYMENT ELECTION" and,
collectively with the Stock Election and the Cash Election, an
"ELECTION"). Contingent Payment Elections shall be made on a Form of
Election. A Shares Representative may submit multiple Forms of Election;
PROVIDED, that such Shares Representative certifies that each such Form
of Election covers all the Company Common Shares held by such Shares
Representative for each beneficial owner whose Company Common Shares are
covered by such Form of Election.
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(h) FORM OF ELECTION. To be effective, a Form of Election must be properly
completed, signed and submitted to the Exchange Agent and accompanied by
the certificates representing the Company Common Shares ("COMPANY COMMON
CERTIFICATES") as to which the Election is being made (or by an
appropriate guarantee of delivery of such Company Common Certificate
signed by a firm that is a member of any registered national securities
exchange or a member of the National Association of Securities
Dealers, Inc. or a bank, broker, dealer, credit union, savings
association or other entity that is a member in good standing of the
Securities Transfer Agent's Medallion Program, the NYSE Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program). All
Company Common Certificates so surrendered shall be subject to the
exchange procedures set forth in SECTION 3.2(B). Parent shall have the
discretion, which it may delegate in whole or in part to the Exchange
Agent, to determine whether Forms of Election have been properly
completed, signed and submitted or revoked and to disregard immaterial
defects in Forms of Election. The decision of Parent (or the Exchange
Agent) in such matters shall be conclusive and binding. Neither Parent
nor the Exchange Agent shall be under any obligation to notify any person
of any defect in a Form of Election submitted to the Exchange Agent. The
Exchange Agent shall also make all computations contemplated by this
SECTION 3.1, and all such computations shall be conclusive and binding on
the holders of Company Common Shares.
(i) DEEMED NON-ELECTION. For the purposes hereof, a holder of Company Common
Shares who does not submit a Form of Election that is received by the
Exchange Agent prior to the Election Deadline (the "NO ELECTION SHARES")
shall be deemed to have made a Stock Election. If Parent or the Exchange
Agent shall determine that any purported Election was not properly made,
the shares subject to such improperly made Election shall be treated as
No Election Shares.
(j) ELECTION DEADLINE. Parent and the Company shall each use its reasonable
best efforts to cause copies of the Form of Election to be mailed to
record holders of Company Common Shares not less than thirty (30) days
prior to the Effective Time and to make the Form of Election available to
all Persons who become record holders of Company Common Shares during the
period between the date of such mailing and the Effective Time. A Form of
Election must be received by the Exchange Agent by 5:00 p.m., New York
City time, on the tenth business day after the Effective Time (the
"ELECTION DEADLINE") in order to be effective. A record holder may revoke
his Election by written notice received at or prior to the Election
Deadline. Any Election relating to Company Common Shares which become
Dissenting Shares shall be deemed automatically revoked as of the
Election Deadline.
(k) ANTI-DILUTION PROVISIONS. In the event Parent (i) changes (or
establishes a record date for changing) the number of Parent Common
Shares issued and outstanding prior to the Effective Time as a result of
a stock split, stock dividend, stock combination, recapitalization,
reclassification, reorganization or similar transaction with respect to
the outstanding Parent Common Shares or (ii) pays or makes an
extraordinary dividend or distribution in respect of Parent Common Shares
(other than a distribution referred to in clause (i) of this sentence)
and, in either case, the record date therefor shall be prior to the
Effective Time, the Merger Consideration and Subscription Shares shall be
proportionately adjusted. Regular periodic cash dividends and increases
thereon consistent with past practices shall not be considered
extraordinary for purposes of the preceding sentence.
(l) DISSENTING SHARES. To the extent that holders thereof are entitled to
appraisal rights under Section 262 of the DGCL, Company Common Shares
issued and outstanding immediately prior to the Effective Time and held
by a holder who has properly exercised and perfected his demand for
appraisal rights under Section 262 of the DGCL (the "Dissenting Shares")
shall not be converted into the right to receive the Merger
Consideration, but the holders of
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Dissenting Shares shall be entitled to receive from the Company such
consideration as shall be determined pursuant to Section 262 of the DGCL;
provided, however, that if any such holder shall have failed to perfect
or shall effectively withdraw or lose his right to appraisal and payment
under the DGCL, such holder's Company Common Shares shall thereupon be
deemed to have been converted as of the Effective Time into the right to
receive the Cash Consideration, without any interest thereon, and such
shares shall not be deemed to be Dissenting Shares.
(m) MAXIMUM NUMBER OF PARENT COMMON SHARES. The maximum number of Parent
Common Shares that may be issued in connection with the Merger shall be
specified in a certificate mutually agreed to by Parent and the Company
and delivered at the Closing. Such certificate, as so delivered, shall be
deemed to form a part of this Agreement.
SECTION 3.2. Exchange of Certificates.
(a) DEPOSIT WITH EXCHANGE AGENT. Within five business days after the
Election Deadline, the Surviving Corporation shall deposit with a bank or
trust company mutually agreeable to Parent and the Company (the "EXCHANGE
AGENT"), pursuant to an agreement in form and substance reasonably
acceptable to Parent and the Company, an amount of cash and certificates
representing Parent Common Shares required to effect the conversion of
Company Common Shares into Parent Common Shares and cash in accordance
with SECTIONS 3.1(C)(I), 3.1(C)(II) AND 3.1(C)(III)(A).
(b) EXCHANGE AND PAYMENT PROCEDURES. As soon as reasonably practicable (but
not more than 15 days) after the Election Deadline, Parent shall cause
the Exchange Agent to mail to each holder of record of a Company Common
Certificate representing Company Common Shares who did not make a valid
Election pursuant to SECTION 3.1: (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title
to the Company Common Certificates shall pass, only upon actual delivery
of the Company Common Certificates to the Exchange Agent) and
(ii) instructions for effecting the surrender of the Company Common
Certificates and receiving the Merger Consideration to which such holder
shall be entitled pursuant to SECTION 3.1. Upon surrender of a Company
Common Certificate to the Exchange Agent for cancellation, together with
a duly executed letter of transmittal and such other documents as the
Exchange Agent may reasonably require, the holder of such Company Common
Certificate shall be entitled to receive in exchange therefor (A) a
certificate representing that number of whole Parent Common Shares into
which the Company Common Shares previously represented by such Company
Common Certificate have been converted in accordance with
SECTION 3.1(C)(II) or 3.1(C)(III)(A) or (B) the cash to which such holder
is entitled in accordance with SECTION 3.1(C)(I) and (C) the cash in lieu
of fractional Parent Common Shares to which such holder has the right to
receive pursuant to SECTION 3.2(D), and the Company Common Certificate so
surrendered shall be canceled. In the event the Merger Consideration is
to be delivered to any Person other than the Person in whose name the
Company Common Certificate surrendered in exchange therefor is registered
in the transfer records of Company, the Merger Consideration may be
delivered to a transferee if the Company Common Certificate is presented
to the Exchange Agent, accompanied by all documents required to evidence
and effect such transfer and by evidence satisfactory to the Exchange
Agent that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this SECTION 3.2(B), each Company Common
Certificate (other than a Company Common Certificate representing Company
Common Shares to be canceled in accordance with SECTION 3.1(B) or
Dissenting Shares) shall, at and after the Effective Time, be deemed to
represent only the right to receive, upon such surrender, the Merger
Consideration contemplated by this SECTION 3.2(B). No interest will be
paid or will accrue on any cash
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payable to holders of Company Common Certificates pursuant to the
provisions of this ARTICLE III.
(c) DISTRIBUTION WITH RESPECT TO UNEXCHANGED SHARES. No dividends or other
distributions that are declared or made on or after the Effective Time
with respect to Parent Common Shares or that are payable to holders of
record thereof on or after the Effective Time shall be paid to any Person
entitled by reason of the Merger to receive certificates representing
Parent Common Shares, and no cash payment in lieu of fractional shares
shall be paid to any such Person pursuant to SECTION 3.2(D), until such
Person shall surrender his Company Common Certificates as provided in
SECTION 3.2(B). Subject to the effect of unclaimed property, escheat and
other applicable Laws, following surrender of any such Company Common
Certificate, there shall be paid to the record holder of the certificates
representing whole Parent Common Shares issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of any
cash payable in lieu of a fractional Parent Common Share to which such
holder is entitled pursuant to SECTION 3.2(D) and the amount of dividends
or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole Parent Common Shares and
(ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect
to such whole Parent Common Shares.
(d) NO FRACTIONAL SECURITIES. In lieu of any such fractional securities,
each holder of Company Common Shares who would otherwise have been
entitled to a fraction of a Parent Common Share upon surrender of Company
Common Certificates for exchange pursuant to this ARTICLE III will be
paid an amount in cash (without interest) equal to such holder's
proportionate interest in the net proceeds from the sale or sales in the
open market by the Exchange Agent, on behalf of all such holders, of the
aggregate fractional Parent Common Shares issued pursuant to this
ARTICLE III. As soon as practicable following the Effective Time, the
Exchange Agent shall determine the excess of (i) the number of whole
Parent Common Shares delivered to the Exchange Agent by Parent over
(ii) the aggregate number of whole Parent Common Shares to be distributed
to holders of Company Common Shares pursuant to Section 3.2(b) (such
excess being herein called the "EXCESS PARENT COMMON SHARES"). The
Exchange Agent, as agent for the former holders of Company Common Shares,
shall sell the Excess Parent Common Shares at the prevailing prices on
the NYSE. The sales of the Excess Parent Common Shares by the Exchange
Agent shall be executed on the NYSE through one or more member firms of
the NYSE and shall be executed in round lots to the extent practicable.
Parent shall pay all commissions, transfer taxes and other out-of-pocket
transaction costs, including the expenses and compensation of the
Exchange Agent, incurred in connection with such sale of Excess Parent
Common Shares. Until the net proceeds of such sale have been distributed
to the former holders of Company Common Shares, the Exchange Agent will
hold such proceeds in trust for such former holders. As soon as
practicable after the determination of the amount of cash to be paid to
former holders of Company Common Shares in lieu of any fractional
interests, the Exchange Agent shall promptly distribute or cause to be
distributed such amounts to such former holders.
(e) TERMINATION OF EXCHANGE AGENT. Any certificates representing Parent
Common Shares deposited with the Exchange Agent pursuant to
SECTION 3.2(A)and not exchanged within one year after the Effective Time
pursuant this SECTION 3.2 shall be returned by the Exchange Agent to
Parent, which shall thereafter act as Exchange Agent. All funds held by
the Exchange Agent for payment to the holders of unsurrendered Company
Common Certificates and unclaimed at the end of one year from the
Effective Time shall be returned to Parent, after which time any holder
of unsurrendered Company Common Certificates shall look as a general
creditor only
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to Parent for payment of such funds to which such holder may be due,
subject to applicable Law.
SECTION 3.3. OPTIONS AND WARRANTS.
(a) Each option to purchase shares of Company Common Stock (each, a "COMPANY
OPTION") issued by the Company pursuant to any stock option or similar
plan of the Company or pursuant to an option agreement or otherwise as
set forth in SECTION 5.3 of the Company Disclosure Statement, which is
outstanding immediately prior to the Effective Time shall, by virtue of
the Merger and without any further action on the part of any holder
thereof, be assumed by Parent and converted into an option (a "PARENT
OPTION") to purchase that number of Parent Common Shares determined by
multiplying the number of Company Common Shares subject to such Company
Option immediately prior to the Effective Time by the Exchange Ratio, at
an exercise price per Parent Common Share equal to the exercise price per
share of such Company Option immediately prior to the Effective Time
DIVIDED BY the Exchange Ratio, rounded down to the nearest whole cent. If
the foregoing calculation results in an assumed Company Option being
exercisable for a fraction of a Parent Common Share, then the number of
Parent Common Shares subject to such option shall be rounded up to the
nearest whole number of shares, with no cash being payable for such
fractional share. The terms and conditions of each Parent Option shall
otherwise remain as set forth in the Company Option converted into such
Parent Option.
(b) Each warrant to purchase shares of Company Common Stock (each, a
"COMPANY WARRANT") set forth in SECTION 5.3 of the Company Disclosure
Statement, which is outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any further action on the part
of any holder thereof, be assumed by Parent and converted into a warrant
(a "Parent Warrant") to purchase that number of Parent Common Shares
determined by multiplying the number of Company Common Shares subject to
such Company Warrant immediately prior to the Effective Time by the
Exchange Ratio, at an exercise price per Parent Common Share equal to the
exercise price per share of such Company Warrant immediately prior to the
Effective Time DIVIDED BY the Exchange Ratio, rounded down to the nearest
whole cent. If the foregoing calculation results in an assumed Company
Warrant being exercisable for a fraction of a Parent Common Share, then
the number of Parent Common Shares subject to such warrant shall be
rounded up to the nearest whole number of shares, with no cash being
payable for such fractional share. The terms and conditions of each
Parent Warrant shall otherwise remain as set forth in the Company Warrant
converted into such Parent Warrant.
(c) The adjustment provided in SECTION 3.3(A) with respect to any options
which are "incentive stock options" (as defined in Section 422 of the
Code) shall be and is intended to be effected in a manner which is
consistent with Section 424(a) of the Code.
SECTION 3.4. TRANSFER OF SHARES AFTER THE EFFECTIVE TIME. No transfers of
Company Common Shares shall be made on the stock transfer books of the Company
after the close of business on the day prior to the date of the Effective Time.
SECTION 3.5. ESCHEAT. The Company shall not be liable to any Person for
shares or funds delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Laws.
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ARTICLE IV
CONTINGENT PAYMENTS
A record holder of Company Common Shares immediately prior to the Effective
Time who properly makes a Contingent Payment Election in accordance with
SECTION 3.1 (a "CONTINGENT PAYMENT RECORD HOLDER") shall have the following
contractual right to receive additional Parent Common Shares, subject to the
terms and conditions contained herein:
SECTION 4.1. TARGET PERFORMANCE CRITERIA.
(a) 2001 ADJUSTED EBITDA. If 2001 Adjusted EBITDA exceeds $68.9 million,
each Contingent Payment Record Holder shall be entitled to receive, on
the Contingent Share Delivery Date with respect to the Measurement Period
for the fiscal year period consisting of 52 or 53 weeks ending on the
Saturday closest to December 31, 2001, with respect to each Company
Common Share deemed to be held by such Contingent Payment Record Holder
in respect of which a Contingent Payment Election has been made, the
number of Parent Common Shares (together with the associated Rights)
equal to (i) the Contingent Earnout Exchange Ratio MULTIPLIED BY
(ii) the lesser of (A) 1 or (B) a fraction, the numerator of which is the
amount by which 2001 Adjusted EBITDA exceeds $68.9 million, and the
denominator of which is $7.7 million (the "2001 CONTINGENT PAYMENT").
(b) 2002 ADJUSTED EBITDA. If 2002 Adjusted EBITDA exceeds $84 million, each
Contingent Payment Record Holder shall be entitled to receive, on the
Contingent Share Delivery Date with respect to the Measurement Period for
the fiscal year period consisting of 52 or 53 weeks ending on the
Saturday closest to December 31, 2002, with respect to each Company
Common Share deemed to be held by such Contingent Payment Record Holder
in respect of which a Contingent Payment Election has been made, the
number of Parent Common Shares (together with the associated Rights)
equal to (i) the Contingent Earnout Exchange Ratio MULTIPLIED BY
(ii) the lesser of (A) 1 or (B) a fraction, the numerator of which is the
amount by which 2002 Adjusted EBITDA exceeds $84 million, and the
denominator of which is $9.3 million (the "2002 CONTINGENT PAYMENT").
(c) AGGREGATE ADJUSTED EBITDA. If Aggregate Adjusted EBITDA exceeds
$235.5 million, each Contingent Payment Record Holder shall be entitled
to receive, on the Contingent Share Delivery Date with respect to the
Measurement Period for the three-year period beginning January 2, 2000
and ending on the Saturday closest to December 31, 2002, with respect to
each Company Common Share deemed to be held by such Contingent Payment
Record Holder and in respect of which a Contingent Payment Election has
been made, the number of Parent Common Shares (together with the
associated Rights) equal to (i) the Contingent Earnout Exchange Ratio
MULTIPLIED BY (ii) the lesser of (A) 1 or (B) a fraction, the numerator
of which is the amount by which Aggregate Adjusted EBITDA exceeds
$235.5 million, and the denominator of which is $11.8 million (the
"Aggregate Contingent Payment" and together with the 2001 Contingent
Payment and the 2002 Contingent Payment, the "CONTINGENT PAYMENTS").
SECTION 4.2. DETERMINATION OF CONTINGENT PAYMENTS.
(a) The Independent Auditors shall be engaged by the Affiliated Transaction
Committee to determine Adjusted EBITDA for any applicable period, as well
as 2001 Adjusted EBITDA, 2002 Adjusted EBITDA and Aggregate Adjusted
EBITDA, as the case may be, within 75 days after the applicable
Measurement Period. After each Measurement Period, but not later than
thirty (30) days following the completion of Parent's annual year-end
audit, the Independent Auditors shall prepare and deliver to the
Affiliated Transaction Committee (with a copy to Robert Pohlad on behalf
of the Contingent Payment Record Holders) a report (a "PRELIMINARY
CONTINGENT PAYMENT REPORT") setting forth the Independent Auditors'
determination of the
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Adjusted EBITDA for any applicable period, as well as 2001 Adjusted
EBITDA, 2002 Adjusted EBITDA and Aggregate Adjusted EBITDA, as the case
may be. Within ten (10) days after the Independent Auditors shall have
delivered the Preliminary Contingent Payment Report to the Affiliated
Transaction Committee and Robert Pohlad, Robert Pohlad, on behalf of the
Contingent Payment Record Holders, shall submit in writing to the
Affiliated Transaction Committee any objections thereto that he may have.
If Robert Pohlad does not submit in writing any such objections within
such 10-day period, it shall be conclusively presumed that Robert Pohlad,
on behalf of the Contingent Payment Record Holders, does not object to
the Preliminary Contingent Payment Report.
(b) As soon as practicable after receiving the written objections, if any,
from Robert Pohlad, on behalf of the Contingent Payment Record Holders,
but in no event more than 25 days after the Independent Auditors shall
have delivered the Preliminary Contingent Payment Report to the
Affiliated Transaction Committee and Robert Pohlad, the Affiliated
Transaction Committee shall review the same and any written objections
thereto received from Robert Pohlad as contemplated by SECTION 4.2(A) and
shall determine whether it finds the Preliminary Contingent Payment
Report to be reasonable. If the Affiliated Transaction Committee finds
the Preliminary Contingent Payment Report to be reasonable, the
determinations set forth therein shall be final and binding on all
parties, including, without limitation, Parent and each of the Contingent
Payment Record Holders.
(c) If the Affiliated Transaction Committee does not find the Preliminary
Contingent Payment Report to be reasonable, it shall submit in writing to
the Independent Auditors within such 25-day period its objections
thereto. The Independent Auditors and the Affiliated Transaction
Committee shall use their reasonable efforts to resolve by written
agreement (the "AGREED ADJUSTMENTS") any differences as to the
determinations set forth in the Preliminary Contingent Payment Report,
and, if the Independent Auditors and the Affiliated Transaction Committee
so resolve any such differences, the determinations set forth in the
Preliminary Contingent Payment Report as adjusted by the Agreed
Adjustments shall be final and binding on all parties, including, without
limitation, Parent and each of the Contingent Payment Record Holders.
(d) If any objections raised by the Affiliated Transaction Committee are not
resolved by Agreed Adjustments within the 10-day period next following
such 25-day period, then the Independent Auditors and the Affiliated
Transaction Committee shall submit the objections that are then
unresolved to the Accounting Firm. The Accounting Firm shall be directed
by the Independent Auditors and the Affiliated Transaction Committee to
seek to resolve the unresolved objections as promptly as reasonably
practicable and to deliver written notice to each of the Independent
Auditors and the Affiliated Transaction Committee setting forth its
resolution of the unresolved objections. The determinations set forth in
the Preliminary Contingent Payment Report, as adjusted by the Agreed
Adjustments and by Accounting Firm's resolution of the unresolved
objections, shall be final and binding on all parties, including, without
limitation, Parent and each of the Contingent Payment Record Holders. All
objections shall be resolved no later than 45 days after the 10-day
period.
(e) Parent and the Surviving Corporation shall make available to the
Independent Auditors and the Affiliated Transaction Committee (and its
respective representatives) and, if applicable, the Accounting Firm, such
books, records and other information as any of the foregoing may
reasonably request to prepare or review any Preliminary Contingent
Payment Report, the Agreed Adjustments or any matters submitted to the
Accounting Firm.
(f) The fees and expenses of the Accounting Firm shall be paid by Parent.
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SECTION 4.3. DELIVERY OF CONTINGENT PAYMENT SHARES.
(a) On each Contingent Share Delivery Date or as soon as practicable
thereafter, Parent shall deposit with the Exchange Agent in trust for the
Contingent Payment Record Holders certificates representing the total
Contingent Payments, if any, to be paid on such Contingent Share Delivery
Date pursuant to this ARTICLE IV.
(b) On each Contingent Share Delivery Date, each Contingent Payment Record
Holder shall be entitled to receive, with respect to each Company Common
Share deemed to be held by such Contingent Payment Record Holder in
respect of which a Contingent Payment Election has been made, the
Contingent Payments for the applicable Measurement Period.
(c) In the event Parent (i) changes (or establishes a record date for
changing) the number of Parent Common Shares issued and outstanding prior
to a Contingent Share Delivery Date as a result of a stock split, stock
dividend, stock combination, recapitalization, reclassification,
reorganization or similar transaction with respect to the outstanding
Parent Common Shares or (ii) pays or makes an extraordinary dividend or
distribution in respect of Parent Common Shares (other than a
distribution referred to in clause (i) of this sentence) and, in either
case, the record date therefor shall be after a Contingent Share Earned
Date but prior to a Contingent Share Delivery Date, the Contingent
Payments determined in accordance with SECTION 4.1 shall be
proportionately adjusted. Regular periodic cash dividends and increases
thereon consistent with past practices shall not be considered
extraordinary for purposes of the preceding sentence.
(d) Unless and until certificates representing the Contingent Payments shall
be delivered to the Exchange Agent for the benefit of the Contingent
Payment Record Holders pursuant to SECTION 4.3(A), no dividends payable
to holders of record of Parent Common Shares shall be paid to the
Contingent Payment Record Holders with respect to Parent Common Shares
representing the Contingent Payments.
(e) The Exchange Agent shall promptly deliver any certificates representing
the Contingent Payments payable to the Contingent Payment Record Holders
pursuant to this ARTICLE IV to the Contingent Payment Record Holders at
the addresses of the Contingent Payment Record Holders as they appeared
on the stock records of the Company at the Effective Time or such other
addresses as the Contingent Payment Record Holders shall provide to the
Exchange Agent by written notice. No fractional Parent Common Shares
shall be issued or delivered pursuant to this ARTICLE IV. In lieu of any
such fractional securities, each Contingent Payment Record Holder who
would otherwise have been entitled hereunder to a fraction of a Parent
Common Share but for this SECTION 4.3(E) will be paid an amount in cash
(without interest) equal to (i) the fraction of a Parent Common Share to
which such Contingent Payment Record Holder would otherwise have been
entitled MULTIPLIED BY (ii) the closing price per Parent Common Share on
the NYSE (as reported in the NYSE Composite Transactions) on the
Contingent Share Delivery Date.
SECTION 4.4. AFFILIATED TRANSACTIONS COMMITTEE. By accepting any
consideration under this Agreement, each Contingent Payment Record Holder shall
be deemed to have agreed as follows:
(a) Such Contingent Payment Record Holder irrevocably appoints and
authorizes the Affiliated Transaction Committee to act as its agent
hereunder with such powers as are delegated hereunder to the Affiliated
Transaction Committee, together with such other powers as are incidental
thereto, and to take such other actions in connection with the foregoing,
consistent with the terms of this Agreement, as the Affiliated
Transaction Committee may deem necessary or appropriate, including
without limitation, as contemplated by the definition of Adjusted EBITDA
in SECTION 4.8. The Affiliated Transaction Committee (i) shall have no
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duties or responsibilities except as expressly set forth herein or in the
by-laws of Parent, (ii) shall not be responsible in its capacity as the
Affiliated Transaction Committee for any recitals, statements,
representations or warranties contained herein, or in any certificate or
other document referred to herein, the validity, effectiveness or
enforceability of this Agreement, the failure of the Surviving
Corporation to achieve any targets or the failure of any party to perform
any of its obligations hereunder, (iii) shall not be required to initiate
or conduct any litigation or collection proceedings and (iv) shall not be
responsible for any action taken or omitted to be taken hereunder, except
for, in the case of any member of the Affiliated Transaction Committee,
his own gross negligence or willful misconduct. The Affiliated
Transaction Committee may consult with legal counsel, independent public
accountants and other experts selected by it, and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance
with the advice of such counsel, independent public accountants or
experts. No act or omission of the Affiliated Transaction Committee,
whether as a result of gross negligence, willful misconduct or otherwise,
shall relieve Parent or Merger Sub of its obligations under this
Agreement.
(b) The Affiliated Transaction Committee shall be entitled to rely upon any
certification, notice or other communication believed by it to be genuine
and correct and to have been signed by or sent on behalf of the proper
Person or Persons and delivered in accordance with this Agreement. The
Affiliated Transaction Committee shall not be required to take any action
which shall expose the members thereof to personal liability or which is
contrary to this Agreement or applicable Law.
(c) The Affiliated Transaction Committee shall not be deemed to have
knowledge or notice of the occurrence of any event unless it shall have
received written notice thereof in accordance with this Agreement.
(d) Parent and the Surviving Corporation shall be entitled to rely on any
and all action taken by the Affiliated Transaction Committee under this
Agreement without any liability to, or obligation to inquire of, any of
the Contingent Payment Record Holders, and shall be entitled to rely on
any written action purporting on its face to be an action of the
Affiliated Transaction Committee and signed by any two members of the
Affiliated Transaction Committee as an action of the Affiliated
Transaction Committee.
SECTION 4.5. ASSIGNABILITY; ORDINARY COURSE. The right of each Contingent
Payment Record Holder to receive Parent Common Shares pursuant to Article IV of
this Agreement may not be assigned or transferred in any manner whatsoever prior
to the delivery of certificates representing the Contingent Payments, except by
operation of law. In no event shall any right to Contingent Payments pursuant to
this Article IV be evidenced by negotiable certificates of any kind.
SECTION 4.6. TIME LIMIT. Notwithstanding any other provision of this
Agreement, no later than four years after the Effective Time, Parent shall
transfer to the Exchange Agent in trust for the Contingent Payment Record
Holders, and the Exchange Agent shall transfer to the Contingent Payment Record
Holders, certificates representing the total Contingent Payments to be paid, if
any, pursuant to this ARTICLE IV; and in no event shall any Contingent Payments
be paid to a Contingent Payment Record Holder more than four years after the
Effective Time.
SECTION 4.7. OPTION TO PURCHASE ADDITIONAL PARENT COMMON SHARES.
(a) Each Contingent Payment Record Holder shall have the right, on or prior
to the Election Deadline, to elect to purchase from Parent, as more fully
set forth below, up to that number of Subscription Shares, rounded down
to the nearest whole share, equal to the number of Company Common Shares
in respect of which such Contingent Payment Record Holder has made a
Contingent Payment Election MULTIPLIED BY the Subscription Share Purchase
Rate, at a
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price per share equal to the Parent Reference Price. The Exchange Agent
shall notify Dakota Holdings within five business days after the Election
Deadline of the number of Subscription Shares not purchased by the other
Contingent Payment Record Holders. Dakota Holdings shall be entitled to
purchase, within ten (10) days after delivery of such notice, any
Subscription Shares not purchased by the other Contingent Payment Record
Holders, at a price per share equal to the Parent Reference Price.
(b) The Form of Election shall be designed to allow holders of Company
Common Shares who make Contingent Payment Elections to also designate
whether, and to what extent, they desire to purchase Subscription Shares.
The letter of transmittal contemplated by Section 3.2(b) shall contain
instructions for effecting the payment for Subscription Shares.
SECTION 4.8. DEFINITIONS. For the purpose of this Article IV, the following
terms shall have the meanings specified below:
"ACCOUNTING FIRM" means a nationally recognized accounting firm (other than
the Independent Auditors) selected by the Affiliated Transaction Committee, in
its sole discretion; PROVIDED, that such accounting firm is independent of
Parent, Merger Sub and the Company and their respective Affiliates.
"ADJUSTED EBITDA" means, with respect to any period, the earnings before
interest, taxes, depreciation and amortization of the Company or the Surviving
Corporation, as the case may be, for such period, calculated in accordance with
past practice of the Company and excluding (a) any earnings derived from
acquisitions made by the Company or the Surviving Corporation subsequent to the
date of this Agreement and (b) any cost savings or increased costs which result
from the Merger. There shall also be deducted from Adjusted EBITDA for the
applicable period (unless the Affiliated Transaction Committee determines an
alternative adjustment is more appropriate (as provided below)) (i) any capital
expenditures by the Company or the Surviving Corporation in excess of
$30.3 million for the fiscal year period consisting of 52 or 53 weeks ending on
the Saturday closest to December 31, 2001 and $32.6 million for the fiscal year
period consisting of 52 or 53 weeks ending on the Saturday closest to
December 31, 2002 and (ii) any aggregate Pepsi spend-back amounts in excess of
the amount projected for such period as set forth in the Company Management
Presentation dated June 1, 2000, in each case unless otherwise agreed by the
Affiliated Transaction Committee (it being understood that the Affiliated
Transaction Committee shall determine, in its reasonable discretion and in
consultation with Robert Pohlad, what adjustments, if any, shall be made as a
result of such excess capital expenditures or Pepsi spend-back amounts). There
shall be no deduction from Adjusted EBITDA, and the parties expressly agree that
Adjusted EBITDA shall not include, any costs or expenses incurred by the Company
or the Surviving Corporation in connection with the Merger, including, by way of
example only, attorneys' fees and expenses, brokers and investment bankers' fees
and expenses, special committee fees and expenses, due diligence costs or fees
and expenses associated with the printing, filing and mailing of the
Registration Statement and the Proxy Statement.
"AGGREGATE ADJUSTED EBITDA" means the sum of Adjusted EBITDA for each of the
fiscal years in the three-year period beginning January 2, 2000 and ending on
the Saturday closest to December 31, 2002.
"CONTINGENT SHARE DELIVERY DATE" means, with respect to a Measurement
Period, the later of (a) 90 days following the end of such Measurement Period
and (b) 10 days following the date on which the Preliminary Contingent Payment
Report for such Measurement Period becomes final and binding on Parent and the
Contingent Payment Record Holders in accordance with SECTION 4.2.
"CONTINGENT SHARE EARNED DATE" means, with respect to a Measurement Period,
the first day after the end of such Measurement Period.
"MEASUREMENT PERIOD" means, as the case may be, each of (i) the fiscal year
period consisting of 52 or 53 weeks ending on the Saturday closest to
December 31, 2001, (ii) the fiscal year period consisting
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of 52 or 53 weeks ending on the Saturday closest to December 31, 2002 and
(iii) the three-year period beginning January 2, 2000 and ending on the Saturday
closest to December 31, 2002.
"2001 ADJUSTED EBITDA" means Adjusted EBITDA for the fiscal year period
consisting of 52 or 53 weeks ending on the Saturday closest to December 31, 2001
PLUS an amount equal to the excess, if any, of Adjusted EBITDA for the fiscal
year period consisting of 52 or 53 weeks ending on the Saturday closest to
December 31, 2000 over $65.6 million, but only to the extent that such excess
does not exceed $4.4 million.
"2002 ADJUSTED EBITDA" means Adjusted EBITDA for the fiscal year period
consisting of 52 or 53 weeks ending on the Saturday closest to December 31,
2002.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Statement, which identifies
exceptions by specific Section references, the Company represents and warrants
to Parent and Merger Sub as follows:
SECTION 5.1. ORGANIZATION. Each of the Company and each of its Subsidiaries
is a corporation or other legal entity duly organized or formed, as applicable,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or formation and has all requisite corporate or other power and
authority to carry on its business as now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power
and authority would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company or prevent or
materially delay the consummation of the Merger. Each of the Company and each of
its Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its property makes such qualification or
licensing necessary, except in such jurisdictions where the failure to be so
duly qualified or licensed and in good standing would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on the
Company or prevent or materially delay the consummation of the Merger. The
Company has delivered to Parent complete and correct copies of the Company
Charter and by-laws of the Company, and has made available to Parent the
certificates of incorporation and by-laws (or similar organizational documents)
of its material Subsidiaries, each as in effect on the date hereof.
SECTION 5.2. SUBSIDIARIES. SECTION 5.2 of the Company Disclosure Statement
lists each Subsidiary of the Company and its jurisdiction of incorporation or
formation and identifies the Company's (direct or indirect) percentage ownership
interest therein. All of the outstanding shares of capital stock of, or other
ownership interests in, each such Subsidiary have been duly authorized and
validly issued and are fully paid and nonassessable and are owned by the
Company, by another Wholly Owned Subsidiary of the Company or by the Company and
one or more Wholly Owned Subsidiaries of the Company, free and clear of all
pledges, claims, liens, charges, encumbrances and security interests of any kind
or nature whatsoever (collectively, "LIENS"), other than Liens that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company. Except for the capital stock of, or other
ownership interests in, its Subsidiaries noted above, the Company does not own,
directly or indirectly, any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or similar
interest in, any other Person.
SECTION 5.3. CAPITALIZATION. The authorized capital stock of the Company
consists of 5,000,000 Company Class A Common Shares and 145,000,000 Company
Class B Common Shares. At the close of business on August 8, 2000,
(a) 5,000,000 Company Class A Common Shares and 82,314,377 Company Class B
Common Shares were issued and outstanding (of which 4,000,000 Company Class A
Common Shares and 57,078,274 Company Class B Common Shares were held,
beneficially or of record, by Dakota Holdings), (b) no Company Class A Common
Shares and no Company Class B Common Shares were held by the Company in its
treasury, (c) no Company Class A Common Shares and
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500,000 Company Class B Common Shares were reserved for issuance under the
Pepsi-Cola Puerto Rico Qualified Stock Option Plan, (d) no Company Class A
Common Shares and 500,000 Company Class B Common Shares were reserved for
issuance under the Pepsi-Cola Puerto Rico Non-Qualified Stock Option Plan,
(e) no Company Class A Common Shares and 4,000,000 Company Class B Common Shares
were reserved for issuance under the PepsiAmericas, Inc. 1999 Stock Option Plan,
(f) no Company Class A Common Shares and 2,000,000 Company Class B Common Shares
were reserved for issuance under the PepsiAmericas, Inc. 2000 Employee Stock
Purchase Plan (g) no Company Class A Common Shares and 1,516,667 Company
Class B Common Shares were reserved for issuance upon exercise of outstanding
Company Options granted to a former employee of the Company and (h) no Company
Class A Common Shares and 1,700,000 Company Class B Common Shares were reserved
for issuance upon exercise of outstanding Company Warrants, with an average
exercise price of $6.875 per share. SECTION 5.3 of the Company Disclosure
Statement sets forth a list of all Company Options and Company Warrants
outstanding as of June 1, 2000, together, in each case, with the number of
Company Common Shares issuable upon exercise thereof, the grant date, the
exercise price and the name of the record owner thereof. Since June 1, 2000, no
shares of capital stock of the Company have been issued except pursuant to the
exercise of options or conversion of convertible securities of the Company
outstanding as of June 1, 2000 in accordance with the terms thereof. Except as
set forth above, as of the date of this Agreement, no shares of capital stock or
other voting securities of the Company are issued, reserved for issuance or
outstanding, and there are no phantom stock or other contractual rights the
value of which is determined in whole or in part by the value of any capital
stock of the Company. All outstanding shares of capital stock of the Company
are, and all shares which may be issued will be, when issued, duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. There are no bonds, debentures, notes or other indebtedness of the
Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which stockholders of the
Company may vote. Except as set forth above, there are no securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which the Company or any of its Subsidiaries is a party or by
which any of them is bound obligating the Company or any of its Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of the Company or of any of
its Subsidiaries or obligating the Company or any of its Subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. There are no outstanding
contractual obligations of the Company, or any of its Subsidiaries, (i) to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its Subsidiaries, (ii) to vote or to dispose of any shares of
the capital stock of the Company or any of its Subsidiaries, (iii) to register
any shares of capital stock under the Securities Act or any state securities law
or (iv) to grant preemptive or antidilutive rights with respect to any capital
stock of the Company or any of its Subsidiaries.
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SECTION 5.4. AUTHORITY.
(a) The Board of Directors of the Company has duly adopted resolutions
approving this Agreement, the Parent Stockholder Voting Agreement and the
transactions contemplated hereby and thereby, including the Merger, determining
that the terms of the Merger are advisable, fair to, and in the best interests
of the Company and the Company's stockholders, and recommending that the
Company's stockholders approve and adopt this Agreement. The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and the Parent Stockholder Voting Agreement and, subject to the approval and
adoption of this Agreement by the holders of a majority of the voting power of
the outstanding Company Common Shares (the "COMPANY STOCKHOLDER APPROVAL"), to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the Parent Stockholder Voting Agreement and
the consummation by the Company of the Merger and of the other transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company, and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or the Parent Stockholder
Voting Agreement or to consummate the transactions so contemplated (other than
the Company Stockholder Approval). This Agreement and the Parent Stockholder
Voting Agreement have been duly executed and delivered by the Company and,
assuming this Agreement and the Parent Stockholder Voting Agreement constitute
valid and binding obligations of the other parties hereto and thereto,
constitute valid and binding obligations of the Company enforceable against the
Company in accordance with their respective terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by the
effect of general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(b) The Company has taken all appropriate actions so as to render the
restrictions on business combinations contained in Section 203 of the DGCL
inapplicable to this Agreement, the Company Stockholder Voting Agreement and the
transactions contemplated hereby and thereby, including the Merger, without any
further action on the part of the stockholders or the Board of Directors of the
Company. No other state takeover statute or regulation is applicable to the
Merger.
SECTION 5.5. CONSENTS AND APPROVALS; VIOLATIONS. Except for filings and
Permits as may be required under, and other applicable requirements of, the
Securities Act, the Exchange Act (including the filing with the SEC of the
Registration Statement), state securities or "blue sky" laws ("BLUE SKY LAWS"),
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
ACT") and the DGCL, none of the execution, delivery or performance of this
Agreement and the Parent Stockholder Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby and thereby
will (a) conflict with or result in any breach of any provision of the Company
Charter or by-laws of the Company or of the similar organizational documents of
any of its material Subsidiaries; (b) require any filing, registration,
qualification, declaration or designation with or Permit of, or termination of
any waiting period requirement (each an "Authorization") by, any federal, state,
local or foreign government or any court, tribunal, administrative agency or
commission or other governmental or other regulatory authority or agency,
domestic, foreign or supranational (a "GOVERNMENTAL ENTITY"); (c) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any loan or credit agreement, note, bond, mortgage, indenture, lease, Permit,
concession, franchise, license, contract, agreement or other instrument,
arrangement, understanding or obligation (each a "CONTRACT") to which the
Company or any of its Subsidiaries is a party or by which any of them or any of
their properties or assets may be bound; or (d) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company, any
of its Subsidiaries or any of their properties or assets, except, in the case of
clauses (b), (c) or (d), for failures to obtain Authorizations, violations,
breaches or defaults that would not,
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individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company or prevent or materially delay the consummation of
the Merger.
SECTION 5.6. SEC REPORTS AND FINANCIAL STATEMENTS. The Company has timely
filed all registration statements, prospectuses, forms, reports and documents
required to be filed by it with the SEC under the Securities Act or the Exchange
Act since January 1, 1998 (collectively, the "COMPANY SEC REPORTS"). The Company
SEC Reports (i) as of their respective dates, were prepared in accordance with,
and complied as to form in all material respects with, the requirements of the
Securities Act or the Exchange Act, as the case may be, and the applicable rules
and regulations thereunder and (ii) did not at the time they were filed contain
any untrue statement of material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of the date
hereof, no Subsidiary of the Company is subject to the periodic reporting
requirements of the Exchange Act. Each of the consolidated balance sheets
(including the related notes) included in the Company SEC Reports presents
fairly, in all material respects, the consolidated financial position of the
Company and its Subsidiaries as of its date, and each of the other related
statements (including the related notes) included in the Company SEC Reports
presents fairly, in all material respects, the results of operations, cash flows
and changes in shareholders' equity of the Company and its Subsidiaries as of
its date and for the periods set forth therein, all in conformity with United
States generally accepted accounting principles ("GAAP") consistently applied
during the periods involved, except as otherwise noted therein and subject, in
the case of the unaudited interim financial statements, to normal year-end
adjustments.
SECTION 5.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
the Company SEC Reports, since January 1, 2000, the Company and its Subsidiaries
have conducted their businesses in, and have not entered into or engaged in any
material transaction other than in, the ordinary course consistent with past
practice, and, since such date, there has not been (a) any Material Adverse
Effect on the Company or any event or development that would, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on the
Company, (b) any action taken by the Company or any of its Subsidiaries from
January 1, 2000 through the date of this Agreement that, if taken during the
period from the date of this Agreement through the Effective Time, would
constitute a breach of SECTION 7.1(J), SECTION 7.1(K) (assuming a threshold of
$3 million for any individual contract, arrangement or understanding and a
threshold of $27.9 million for all contracts, arrangements or understandings in
the aggregate), SECTION 7.1(M) (assuming a threshold of $3 million for
agreements with a term longer than one year), SECTION 7.1(P) or SECTION 7.1(R)
or (c) any action taken by the Company or any of its Subsidiaries from June 30,
2000 through the date of this Agreement that, if taken during the period from
the date of this Agreement through the Effective Time, would constitute a breach
of SECTION 7.1(A), (B), (C), (D), (E), (F), (G), (H), (I), (L), (N), (O) OR (Q).
SECTION 5.8. NO UNDISCLOSED LIABILITIES. Except as and to the extent
disclosed or reserved against on the consolidated balance sheet of the Company,
or in the notes thereto, included in the Company SEC Reports filed prior to the
date hereof or as incurred after the date thereof in the ordinary course of
business consistent with past practice and not prohibited by this Agreement,
neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, that
would be required by GAAP to be reflected on a consolidated balance sheet of the
Company and its Subsidiaries (or disclosed in the notes thereto).
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SECTION 5.9. EMPLOYEE BENEFIT PLANS, LABOR MATTERS.
(a) SECTION 5.9(A) of the Company Disclosure Statement sets forth a true and
complete list as of the date hereof of each material employee benefit plan (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) and contract for employment or benefits, including, but
not limited to, severance or change of control agreements, maintained, or
contributed to, by the Company or any of its Subsidiaries, or to which the
Company or any of its Subsidiaries or any entity described in Section 4.14(b),
(c) or (m) of the Code is required to contribute (the "COMPANY BENEFIT PLANS").
With respect to each Company Benefit Plan, the Company has heretofore delivered
or made available to Parent a true, correct and complete copy of (i) each
material writing constituting a part of such Company Benefit Plan, including
without limitation all plan documents, trust agreements, and insurance contracts
and other funding vehicles; (ii) the most recent Annual Report (Form 5500
Series) and accompanying schedule, if any; (iii) the current summary plan
description and any material modifications thereto, if any (in each case,
whether or not required to be furnished under ERISA); (iv) the most recent
annual financial report, if any; (v) the most recent actuarial report, if any;
and (vi) the most recent determination letter from the Internal Revenue Service
(the "IRS"), if any. Except as provided in the foregoing documents delivered to
Parent, there are no amendments to any Company Benefit Plan that have been
adopted or approved nor has the Company or any of its Subsidiaries undertaken to
make any such amendments or to adopt or approve any new plan.
(b) With respect to each Company Benefit Plan which is subject to Title IV
of ERISA, or Section 302 of ERISA or Section 412 or 4971 of the Code, (i) the
present value of accrued benefits under such Company Benefit Plan, based upon
the actuarial assumptions used for funding purposes in the most recent actuarial
report prepared by such Company Benefit Plan's actuary with respect to such
Company Benefit Plan, did not, as of its latest valuation date, exceed the then
current value of the assets of such Company Benefit Plan allocable to such
accrued benefits, (ii) no "reportable event" (within the meaning of
Section 4043 of ERISA) has occurred with respect to any Company Benefit Plan for
which the 30-day notice requirement has not been waived, (iii) there does not
exist any accumulated funding deficiency within the meaning of Section 412 of
the Code or Section 302 of ERISA, whether or not waived, (iv) all premiums to
the Pension Benefit Guaranty Corporation ("PBGC") have been timely paid in full,
(v) no liability (other than for premiums to PBGC) under Title IV of ERISA has
been or is expected to be incurred by the Company or any of its Subsidiaries
with respect to a Company Benefit Plan to which contributions have been made, or
an obligation to make contributions has been present, during the last six years,
(vi) the PBGC has not instituted proceedings to terminate any such Company
Benefit Plan and, to the Company's knowledge, no condition exists that presents
a risk that such proceedings will be instituted or which would constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any such Company Benefit Plan and (vii) there does
not exist any liability of the Company as a result of a failure to comply with
the continuation coverage requirements of Section 601 et seq. of ERISA and
Section 4980B of the Code, except where the failure of any of the foregoing to
be true would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on the Company. No Company Benefit Plan is a
"multiemployer pension plan" (as such term is defined in Section 3(37) of ERISA)
(a "MULTIEMPLOYER PLAN") or a plan that has two or more contributing sponsors,
at least two of whom are not under common control within the meaning of
Section 4063 of ERISA (a "MULTIPLE EMPLOYER PLAN"). Neither the Company nor any
of its Subsidiaries has at any time during the last six years, (A) contributed
to or been obligated to contribute to any Multiemployer Plan or Multiple
Employer Plan or (B) incurred any withdrawal liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan,
that has not been satisfied in full.
(c) Each of the Company Benefit Plans has been operated and administered in
accordance with applicable Laws and administrative rules and regulations of any
Governmental Entity, including, but
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not limited to, ERISA and the Code, except where a violation of any such Law,
rule or regulation would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company. Each of the Company
Benefit Plans intended to be "qualified" within the meaning of Section 401(a) of
the Code has received a favorable determination letter as to such qualification
from the IRS or, with respect to plans qualified in Puerto Rico, from the
Treasury Department of the Commonwealth of Puerto Rico, and no event has
occurred, either by reason of any action or failure to act, which would cause
the loss of any such qualification, except where such action or failure to act
can be cured without having, individually or in the aggregate, a Material
Adverse Effect on the Company. No Company Benefit Plan provides benefits,
including, without limitation, death or medical benefits (whether or not
insured), with respect to current or former employees of the Company or any
Subsidiary thereof beyond their retirement or other termination of service,
other than (i) coverage mandated by applicable Law, (ii) death benefits or
retirement benefits under any "employee pension plan" (as such term is defined
in Section 3(2) of ERISA), (iii) deferred compensation benefits accrued as
liabilities on the books of the Company or any Subsidiary thereof or
(iv) benefits the full cost of which is borne by the current or former employee
(or his beneficiary). All contributions or other amounts accrued or due from the
Company or any Subsidiary thereof as of the Effective Time with respect to each
Company Benefit Plan in respect of current or prior plan years will have been
paid or accrued by such time in accordance with GAAP.
(d) Neither the Company nor any Subsidiary thereof is a party to any
collective bargaining or other labor union contract applicable to persons
employed by the Company or any Subsidiary thereof, and no collective bargaining
agreement or other labor union contract is being negotiated by the Company or
any Subsidiary thereof. There is no labor dispute, strike, slowdown or work
stoppage against the Company or any Subsidiary thereof pending or, to the
knowledge of the Company, threatened that would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company. To the knowledge of the Company, none of the Company, any Subsidiary
thereof or their respective representatives or employees has committed any
unfair labor practices in connection with the operation of the respective
businesses of the Company or any Subsidiary thereof, and there is no charge or
complaint against the Company or any Subsidiary thereof by the National Labor
Relations Board or any comparable state or foreign agency pending or, to the
knowledge of the Company, threatened, except where such unfair labor practice,
charge or complaint would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company.
(e) The Company has identified in SECTION 5.9(E) of the Company Disclosure
Statement and has made available to Parent true and complete copies of all
plans, programs or arrangements (i) to provide compensation by grant of, or to
allow the purchase of, Company stock or stock of a predecessor employer,
(ii) to provide incentive bonuses, (iii) to allow for, or provide for, the
deferral of compensation other than through a plan described in Section 401(a)
of the Code; and with respect to all such plans, programs or arrangements, all
contributions, if any, accrued or due from the Company or any Subsidiary thereof
as of the Effective Time in respect of current or prior plan years will have
been paid or accrued by such time in accordance with GAAP. Neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (either alone or in conjunction with any other event,
such as termination of employment) (A) result in any material payment
(including, without limitation, severance, unemployment compensation, golden
parachute or otherwise) becoming due to any director or any employee of the
Company or any Subsidiary or Affiliate thereof from the Company or any
Subsidiary or Affiliate thereof under any Company Benefit Plan or otherwise,
(B) materially increase any benefits otherwise payable under any Company Benefit
Plan or (C) result in any acceleration of the time of payment or vesting of any
material benefits.
(f) Neither the Company nor any Subsidiary thereof is a party to any
contract, plan, or arrangement under which it is obligated to make or to
provide, or could become obligated to make or
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to provide, a payment or benefit that would be nondeductible under
Section 162(m) or 280G of the Code.
SECTION 5.10. CONTRACTS; INDEBTEDNESS.
(a) Except as disclosed in the Company SEC Reports filed prior to the date
of this Agreement, there is no contract to which the Company or any of its
Subsidiaries is a party, or by which it or any of its properties or assets is
bound, that is material to the business, properties, assets, condition
(financial or otherwise) or operations of the Company and its Subsidiaries,
taken as a whole (collectively, "MATERIAL COMPANY CONTRACTS"). Neither the
Company nor any of its Subsidiaries is in violation of or default under (nor has
the Company or any Subsidiary thereof received written notice (nor has any
director, executive officer or general manager of the Company or any Subsidiary
received oral notice) from any third party alleging that the Company or any of
its Subsidiaries is in violation of or in default under (nor does there exist
any condition which upon the passage of time or the giving of notice would cause
such a violation of or default under)) any Material Company Contract, except for
violations or defaults that would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect on the Company.
(b) Neither the Company nor any of its Affiliates is a party to or is bound
by any Material Company Contract which (i) provides that the terms thereof or
any or all of the benefits or burdens thereunder will be affected or altered
(including, without limitation, by means of acceleration) by, or are contingent
upon the execution of this Agreement or the Parent Stockholder Voting Agreement
or the consummation of the transactions contemplated hereby and thereby, or
(ii) will be subject to termination or cancellation as a result of the execution
of this Agreement or the Parent Stockholder Voting Agreement or the consummation
of the transactions contemplated hereby or thereby.
(c) SECTION 5.10(C) of the Company Disclosure Statement sets forth (i) a
list of all agreements, instruments and other obligations pursuant to which any
indebtedness for borrowed money or capitalized lease obligations of the Company
or any of its Subsidiaries in an aggregate principal amount in excess of
$5,000,000 is outstanding or may be incurred and (ii) the respective principal
amounts outstanding thereunder as of the date of this Agreement.
SECTION 5.11. LITIGATION. As of the date hereof, there is no suit, action or
proceeding pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries that, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on the Company
or prevent or materially delay the consummation of the Merger, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against or affecting the Company or any of its
Subsidiaries that, individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect on the Company or prevent or materially delay the
consummation of the Merger.
SECTION 5.12. COMPLIANCE WITH APPLICABLE LAW.
(a) The Company and its Subsidiaries are in compliance in all respects with
all judgments, orders, decrees, statutes, laws, ordinances, rules and
regulations applicable to the Company, any of its Subsidiaries and their
respective properties or assets, except for instances of noncompliance that,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect on the Company. Neither the Company nor any of its Subsidiaries
has received any written notice regarding any matter that is not fully resolved
from a Governmental Entity that alleges that the Company or any of its
Subsidiaries is not in compliance with any such judgments, orders, decrees,
statutes, laws, ordinances, rules or regulations, and the Company has and is in
compliance with all Permits required for the operation of the business of the
Company and its Subsidiaries as currently conducted (the "COMPANY PERMITS"),
except for those notices, instances of noncompliance or lack of Company Permits
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that, individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect on the Company.
(b) No products shipped, sold or delivered on or prior to the date hereof by
or for the Company or any of its Subsidiaries were, and no food or food
ingredients included in the inventory of the Company or any of its Subsidiaries
on or prior to the date hereof and which are used by the Company or any of its
Subsidiaries were or are, adulterated or misbranded within the meaning of the
Federal Food, Drug & Cosmetic Act and the regulations promulgated thereunder or
comparable food laws and regulations of any jurisdiction of any Governmental
Entity to which such products have been or are intended to be shipped, sold or
delivered, except for any such adulteration or misbranding which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company.
SECTION 5.13. TAXES.
(a) The Company and its Subsidiaries have timely filed all income Tax
Returns and all other material United States federal, state, county, local and
foreign Tax Returns required to be filed by them. All such Tax Returns are true,
correct and complete in all material respects. The Company and its Subsidiaries
have paid all material Taxes due, other than Taxes appropriate reserves for
which have been made in the Company's financial statements included in the
Company SEC Reports filed prior to the date of this Agreement. There are no
material assessments or adjustments that have been asserted in writing against
the Company or its Subsidiaries for any period for which the Company has not
made appropriate reserves in the Company's financial statements included in the
Company SEC Reports filed prior to the date of this Agreement.
(b) There are no material claims, audits, examinations, investigations,
assessments or other proceedings pending against the Company or any of its
Subsidiaries for any alleged deficiency in any Tax, and the Company has not been
notified in writing of any proposed material Tax claims, audits, examinations,
investigations, assessments or other proceedings against the Company or any of
its Subsidiaries (other than, in each case, claims, audits, examinations,
investigations, assessments or other proceedings for which adequate reserves in
the Company's financial statements included in the Company SEC Reports filed
prior to the date of this Agreement have been established or which are being
contested in good faith or are immaterial in amount).
(c) There are no Liens for Taxes on the assets of the Company or any of its
Subsidiaries, except for statutory Liens for current Taxes not yet due and
payable and except for Liens which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company.
(d) The Company and its Subsidiaries have not waived any statute of
limitations with respect to Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
(e) Neither the Company nor any of its Subsidiaries has taken or agreed to
take any action, nor do the executive officers of the Company have any
knowledge of any fact or circumstance that would prevent the Merger from
qualifying as a 368 Reorganization.
(f) The Company is not, nor has it ever been, a party to any Tax sharing
agreement (except with respect to the group of which it is the common parent)
and has not assumed any material Tax liability of any other Person.
(g) To the knowledge of the executive officers of the Company, the
representations set forth in the Company Tax Certificates attached to the
Company Disclosure Statement are true and correct in all material respects.
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SECTION 5.14. ENVIRONMENTAL MATTERS.
(a) Except as disclosed in the Company SEC Reports filed prior to the date
of this Agreement, there is no suit, action, proceeding or inquiry pending or,
to the knowledge of the Company, threatened before any court, Governmental
Entity or other forum in which the Company, any of its Subsidiaries or any of
its former Subsidiaries or businesses has been or, with respect to threatened
suits, actions and proceedings, may be named as a defendant (i) for alleged
noncompliance with any Environmental Law with respect to any of the Company's or
any of its Subsidiaries' properties or any other properties or (ii) relating to
the release into the environment of, or human exposure to, any Hazardous
Substances, whether or not occurring at, on, under or involving a site currently
or formerly owned, leased or operated by the Company, any of its Subsidiaries or
any of its former Subsidiaries or businesses, except for any such suits,
actions, proceedings and inquiries which, individually or in the aggregate, are
not reasonably likely to have a Material Adverse Effect on the Company.
(b) Except as disclosed in the Company SEC Reports filed prior to the date
of this Agreement, (i) during the period of ownership or operation by the
Company, any of its Subsidiaries or any of its former Subsidiaries or businesses
or any of their respective currently or formerly owned, leased or operated
properties, there have been no releases of Hazardous Substances in, on, under or
affecting such properties or, to the knowledge of the Company, any surrounding
site, except in each case for those which, individually or in the aggregate, are
not reasonably likely to have a Material Adverse Effect on the Company, and
(ii) prior to the period of ownership or operation by the Company, any of its
Subsidiaries or any of its former Subsidiaries or businesses of any of such
properties, to the knowledge of the Company, there were no releases of Hazardous
Substances in, on, under or affecting any such property or any surrounding site,
except in each case for those which, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect on the Company.
(c) Except as disclosed in the Company SEC Reports filed prior to the date
of this Agreement, neither the Company nor any of its Subsidiaries is subject to
any order, decree, injunction or other arrangement with any Governmental Entity
or any indemnity or other agreement with any third party relating to liability
under any Environmental Law with respect to any of the Company's or any of its
Subsidiaries' properties or any other properties or relating to any Hazardous
Substances, except for any such order, decree, injunction, arrangement,
indemnity or other agreement which, individually or in the aggregate, is not
reasonably likely to have a Material Adverse Effect on the Company.
SECTION 5.15. INTELLECTUAL PROPERTY. The Company and its Subsidiaries own,
or are validly licensed or otherwise have the right to use, all Intellectual
Property that is material to the conduct of the business of the Company and its
Subsidiaries taken as a whole. No claims are pending or, to the knowledge of the
Company, threatened that the Company or any of its Subsidiaries is infringing or
otherwise adversely affecting the rights of any Person with regard to any such
Intellectual Property. To the knowledge of the Company, no Person is infringing
the rights of the Company or any of its Subsidiaries with respect to any such
Intellectual Property.
SECTION 5.16. REAL PROPERTY. SECTION 5.16 of the Company Disclosure
Statement sets forth a list of all real properties owned or leased by the
Company and its Subsidiaries (the "COMPANY REAL PROPERTY"), the nature of the
interest of the Company and its Subsidiaries and the entity which holds the
interest in those properties. There is no real property (other than the Company
Real Property), the use or possession of which by the Company or its
Subsidiaries is necessary to carry on its business. The Company and its
Subsidiaries have (i) good and marketable title in fee simple to all Company
Real Property owned by it (the "COMPANY OWNED REAL PROPERTY") and (ii) valid
leaseholds under valid and enforceable leases in all Company Real Property
leased by it, in each case free and clear of all Liens, other than Company
Permitted Liens, except in each case where the failure to have the same would
not have a Material Adverse Effect on the Company. None of the Company Real
Property is subject to any lease, other than leases identified in SECTION 5.16
of the Company Disclosure Statement (the
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"COMPANY LEASES"), sublease, license or other agreement granting to any person
any right to the use, occupancy or enjoyment thereof (or any portion thereof).
None of the Company Permitted Liens materially interferes with or has interfered
with the maintenance, use or operation of the Company Real Property by the
Company or its Subsidiaries.
SECTION 5.17. TITLE INSURANCE. The Company has provided or made available to
Parent a true, correct and complete copy of all of the policies of title
insurance insuring the interest of the Company and its Subsidiaries in the
Company Owned Real Property (collectively, the "COMPANY TITLE POLICIES"). All of
the Company Title Policies are in full force and effect. Neither the Company nor
any of its Subsidiaries is in material default under any provisions of the
Company Title Policies. There is no claim by the Company, its Subsidiaries or
any other person pending under any of the Company Title Policies as to which
coverage has been questioned, denied or disputed by the underwriters or issuers
of such Company Title Policies.
SECTION 5.18. REQUIRED VOTE. The Company Stockholder Approval is the only
vote of the holders of any capital stock of the Company necessary under
applicable Law or otherwise to consummate the transactions contemplated hereby.
SECTION 5.19. BROKERS, SCHEDULE OF FEES AND EXPENSE. No broker, investment
banker, financial advisor or other person, other than Salomon Smith Barney Inc.
(the "COMPANY FINANCIAL ADVISOR") and Chase Securities Inc. (the "SPECIAL
COMMITTEE FINANCIAL ADVISOR"), the fees and expenses of which will be paid by
the Company, is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company or
any of its Affiliates. In connection with this Agreement and the transactions
contemplated hereby, the Company is not subject to any obligation or commitment
to pay the legal fees or related expenses of any stockholder of the Company.
SECTION 5.20. OPINION OF FINANCIAL ADVISORS.
(a) The Company has received the opinion of the Company Financial Advisor,
dated the date of this Agreement, to the effect that, as of the date of this
Agreement, the Merger Consideration to be received in the Merger by the holders
of Company Common Shares is fair to such holders from a financial point of view.
A complete and correct signed copy of such opinion has been delivered to Parent,
and such opinion has not been withdrawn or modified. The Company has been
authorized by the Company Financial Advisor to include such opinion in the Proxy
Statement.
(b) The Special Committee of the Board of Directors of the Company has
received the opinion of the Special Committee Financial Advisor, dated the date
of this Agreement, to the effect that, as of the date of this Agreement, the
Cash Consideration, the Stock Consideration and the Contingent Payment
Consideration, each as elected by a holder of Company Common Shares and to be
received in the Merger is fair to the holders of the Company Common Shares
(other than Parent, Dakota Holdings and their respective Affiliates) from a
financial point of view. A complete and correct signed copy of such opinion has
been delivered to Parent, and such opinion has not been withdrawn or modified.
The Company has been authorized by the Special Committee Financial Advisor to
include such opinion in the Proxy Statement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the Parent Disclosure Statement, which identifies
exceptions by specific Section references, Parent and Merger Sub represent and
warrant to the Company as follows:
SECTION 6.1. ORGANIZATION. Each of Parent and each of its Subsidiaries is a
corporation or other legal entity duly organized or formed, as applicable,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or formation and has all requisite corporate or other power
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and authority to carry on its business as now being conducted, except where the
failure to be so organized or formed, existing or in good standing or to have
such power and authority would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Parent or prevent or materially
delay the consummation of the Merger. Each of Parent and each of its
Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its property makes such qualification or
licensing necessary, except in such jurisdictions where the failure to be so
duly qualified or licensed and in good standing would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Parent or prevent or materially delay the consummation of the Merger. Parent has
delivered to the Company complete and correct copies of Parent's certificate of
incorporation and by-laws, and has made available to the Company the
certificates of incorporation and by-laws (or similar organizational documents)
of its material Subsidiaries, each as in effect on the date hereof.
SECTION 6.2. SUBSIDIARIES. SECTION 6.2 of the Parent Disclosure Statement
lists each Subsidiary of Parent and its jurisdiction of incorporation or
formation and identifies Parent's (direct or indirect) percentage ownership
interest therein. All of the outstanding shares of capital stock of, or other
ownership interests in, each such Subsidiary have been duly authorized and
validly issued and are fully paid and nonassessable and are owned by Parent, by
another Wholly Owned Subsidiary of Parent or by Parent and one or more Wholly
Owned Subsidiaries of Parent, free and clear of all Liens, other than Liens that
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Parent. Except for the capital stock of, or other
ownership interests in, its Subsidiaries noted above, Parent does not own,
directly or indirectly, any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or similar
interest in, any other Person.
SECTION 6.3. CAPITALIZATION. The authorized capital stock of Parent consists
of 350,000,000 Parent Common Shares and 12,500,000 shares of preferred stock,
par value $.01 per share ("PARENT PREFERRED SHARES"), of which 3,000,000 shares
have been designated as Series A Junior Participating Preferred Stock. At the
close of business on August 16, 2000, (a) 136,351,384 Parent Common Shares and
no Parent Preferred Shares were issued and outstanding, (b) 30,923,446 Parent
Common Shares and no Parent Preferred Shares were held by Parent in its
treasury, (c) 11,949,150 Parent Common Shares were reserved for issuance upon
exercise of outstanding Parent Options granted under Parent's 2000 Stock
Incentive Plan and Revised Stock Incentive Plan (the "PARENT STOCK INCENTIVE
PLANS"), with an average exercise price of $15.34 per share, and (d) 7,200,088
Parent Common Shares were reserved for the grant of additional awards under the
Parent Stock Incentive Plans. Since January 1, 2000, no shares of capital stock
of Parent have been issued except pursuant to the exercise of options or
conversion of convertible securities of Parent outstanding as of January 1, 2000
in accordance with the terms thereof. Except as set forth above, as of the date
of this Agreement, no shares of capital stock or other voting securities of
Parent are issued, reserved for issuance or outstanding, and there are no
phantom stock or other contractual rights the value of which is determined in
whole or in part by the value of any capital stock of Parent. All outstanding
shares of capital stock of Parent are, and all shares which may be issued will
be, when issued, duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights. There are no bonds, debentures, notes or
other indebtedness of Parent having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of Parent may vote. Except for this Agreement and the Rights, and
except as set forth above, as of the date of this Agreement, there are no
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which Parent is a party or by which
Parent is bound obligating Parent to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other voting
securities of Parent or obligating Parent to issue, grant, extend or enter into
any such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. There are no outstanding contractual obligations of
Parent or
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any of its Subsidiaries, (i) to repurchase, redeem or otherwise acquire any
shares of capital stock of Parent or any of its Subsidiaries, (ii) to vote or to
dispose of any shares of the capital stock of Parent or any of its Subsidiaries,
(iii) to register any shares of capital stock under the Securities Act or any
state securities law or (iv) to grant preemptive or antidilutive rights with
respect to any capital stock of Parent or any of its Subsidiaries. The Parent
Common Shares to be issued in connection with the Merger, when issued as
contemplated herein, will be duly authorized, validly issued, fully paid and
nonassessable, issued in compliance with all applicable federal and state
securities Laws and will be free of any and all Liens (including preemptive
rights), other than restrictions on transfer under state and/or federal
securities Laws applicable to Affiliates of Parent under Rule 144 of the
Exchange Act and Affiliates of the Company under Rule 145 of the Exchange Act.
SECTION 6.4. AUTHORITY.
(a) The Board of Directors of each of Parent and Merger Sub has duly adopted
resolutions approving this Agreement, the Company Stockholder Voting Agreement
and the transactions contemplated hereby and thereby, including the Merger and
the issuance of Parent Common Shares in accordance with the Merger (the "SHARE
ISSUANCE"). Each of Parent and Merger Sub has the requisite corporate power and
authority to execute and deliver this Agreement and the Company Stockholder
Voting Agreement and, subject to the approval of the Share Issuance by the
affirmative vote of a majority of the votes cast (PROVIDED, that the total votes
cast represent over 50% in interest of all securities entitled to vote) (the
"PARENT STOCKHOLDER APPROVAL"), to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance of this Agreement
and the Company Stockholder Voting Agreement and the consummation by each of
Parent and Merger Sub of the Merger, the Share Issuance and the other
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Parent and Merger Sub, and no other
corporate proceedings on the part of Parent or Merger Sub are necessary to
authorize this Agreement or the Company Stockholder Agreement or to consummate
the transactions so contemplated (other than the Parent Stockholder Approval).
This Agreement and the Company Stockholder Voting Agreement have been duly
executed and delivered by each of Parent and Merger Sub and, assuming this
Agreement and the Company Stockholder Voting Agreement constitute valid and
binding obligations of the other parties hereto and thereto, constitute valid
and binding obligations of Parent and Merger Sub enforceable against each of
them in accordance with their respective terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by the
effect of general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(b) Parent has taken all appropriate actions so that, as a result of the
execution, delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby, a "Distribution Date" (as defined in the
Parent Rights Agreement) shall not be deemed to occur, the Rights shall not
separate from the Parent Common Shares (to the extent the Parent Rights
Agreement otherwise provides for such separation) or become exercisable and the
Company shall not become an Acquiring Person (as defined in the Parent Rights
Agreement). The current holders of Rights will have no additional rights under
the Parent Rights Agreement as a result of the Merger, the Share Issuance or any
other transaction contemplated by this Agreement. No state takeover statute or
regulation is applicable to the Merger.
SECTION 6.5. CONSENTS AND APPROVALS, NO VIOLATIONS. Except for filings and
Permits as may be required under, and other applicable requirements of, the
Exchange Act, the Securities Act (including the filing with the SEC of the
Registration Statement), Blue Sky Laws, the HSR Act and the DGCL, none of the
execution, delivery or performance of this Agreement and the Company Stockholder
Voting Agreement by Parent and Merger Sub nor the consummation by Parent and
Merger Sub of the transactions contemplated hereby and thereby will
(a) conflict with or result in any breach of any
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provision of the respective certificate of incorporation or by-laws of Parent or
Merger Sub; (b) require any Authorization of any Governmental Entity;
(c) result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms, conditions or
provisions of any Contract to which Parent or any of its Subsidiaries is a party
or by which any of them or any of their properties or assets may be bound; or
(d) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent, any of its Subsidiaries or any of their properties or
assets, except, in the case of clauses (b), (c) or (d), for failures to obtain
Authorizations, violations, breaches or defaults that would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect on
Parent or prevent or materially delay the consummation of the Merger.
SECTION 6.6. SEC REPORTS AND FINANCIAL STATEMENTS. Parent has timely filed
all registration statements, prospectuses forms, reports and documents required
to be filed by it with the SEC under the Securities Act or the Exchange Act
since May 20, 1999 (collectively, the "PARENT SEC REPORTS"). The Parent SEC
Reports (i) as of their respective dates, were prepared in accordance with, and
complied as to form in all material respects with, the requirements of the
Securities Act or the Exchange Act, as the case may be, and the applicable rules
and regulations thereunder and (ii) did not, at the time they were filed,
contain any untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. As of the
date hereof, no Subsidiary of Parent is subject to the periodic reporting
requirements of the Exchange Act. Each of the consolidated balance sheets
(including the related notes) included in the Parent SEC Reports presents
fairly, in all material respects, the consolidated financial position of Parent
and its Subsidiaries as of its date, and each of the other related statements
(including the related notes) included in the Parent SEC Reports presents
fairly, in all material respects, the results of operations, cash flows and
changes in shareholders' equity of Parent and its Subsidiaries as of its date
and for the respective periods set forth therein, all in conformity with GAAP
consistently applied during the periods involved, except as otherwise noted
therein and subject, in the case of the unaudited interim financial statements,
to normal year-end adjustments.
SECTION 6.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
the Parent SEC Reports, since January 1, 2000, Parent and its Subsidiaries have
conducted their businesses in, and have not entered into or engaged in any
material transaction other than in, the ordinary course consistent with past
practice, and, since such date, there has not been (a) any Material Adverse
Effect on Parent or any event or development that would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Parent,
(b) any action taken by Parent or any of its Subsidiaries from January 1, 2000
through the date of this Agreement that, if taken during the period from the
date of this Agreement through the Effective Time, would constitute a breach of
SECTION 7.2(J), (L) or (M) or (C) any action taken by Parent or any of its
Subsidiaries from June 30, 2000 through the date of this Agreement that, if
taken during the period from the date of this Agreement through the Effective
Time, would constitute a breach of SECTION 7.2(A), (B), (C), (D), (E), (F), (G),
(H), (I) or (K).
SECTION 6.8. NO UNDISCLOSED LIABILITIES. Except as and to the extent
disclosed or reserved against on the consolidated balance sheet of Parent, or in
the notes thereto, included in the Parent SEC Reports filed prior to the date of
this Agreement or as incurred after the date thereof in the ordinary course of
business consistent with past practice and not prohibited by this Agreement,
neither Parent nor any of its Subsidiaries has any liabilities or obligations of
any nature, whether or not accrued, contingent or otherwise, that would be
required by GAAP to be reflected on a consolidated balance sheet of Parent and
its Subsidiaries (or disclosed in the notes thereto).
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SECTION 6.9. EMPLOYEE BENEFIT PLANS, LABOR MATTERS.
(a) SECTION 6.9(A) of the Parent Disclosure Statement sets forth a true and
complete list as of the date hereof of each material employee benefit plan (as
defined in ERISA) and contract for employment or benefits, including, but not
limited to, severance or change of control agreements, maintained, or
contributed to, by Parent or any of its Subsidiaries, or to which Parent or any
of its Subsidiaries or any entity described in Section 4.14(b), (c) or (m) of
the Code is required to contribute (the "PARENT BENEFIT PLANS"). With respect to
each Parent Benefit Plan, Parent has heretofore delivered or made available to
the Company a true, correct and complete copy of (i) each material writing
constituting a part of such Parent Benefit Plan, including without limitation
all plan documents, trust agreements, and insurance contracts and other funding
vehicles; (ii) the most recent Annual Report (Form 5500 Series) and accompanying
schedule, if any; (iii) the current summary plan description and any material
modifications thereto, if any (in each case, whether or not required to be
furnished under ERISA); (iv) the most recent annual financial report, if any;
(v) the most recent actuarial report, if any; and (vi) the most recent
determination letter from the IRS, if any. Except as provided in the foregoing
documents delivered to the Company, there are no amendments to any Parent
Benefit Plan that have been adopted or approved nor has Parent or any of its
Subsidiaries undertaken to make any such amendments or to adopt or approve any
new plan.
(b) With respect to each Parent Benefit Plan which is subject to Title IV of
ERISA, or Section 302 of ERISA or Section 412 or 4971 of the Code, (i) the
present value of accrued benefits under such Parent Benefit Plan, based upon the
actuarial assumptions used for funding purposes in the most recent actuarial
report prepared by such Parent Benefit Plan's actuary with respect to such
Parent Benefit Plan, did not, as of its latest valuation date, exceed the then
current value of the assets of such Parent Benefit Plan allocable to such
accrued benefits, (ii) no "reportable event" (within the meaning of
Section 4043 of ERISA) has occurred with respect to any Parent Benefit Plan for
which the 30-day notice requirement has not been waived, (iii) there does not
exist any accumulated funding deficiency within the meaning of Section 412 of
the Code or Section 302 of ERISA, whether or not waived, (iv) all premiums to
the PBGC have been timely paid in full, (v) no liability (other than for
premiums to PBGC) under Title IV of ERISA has been or is expected to be incurred
by Parent or any of its Subsidiaries with respect to a Parent Benefit Plan to
which contributions have been made, or an obligation to make contributions has
been present, during the last six years, (vi) the PBGC has not instituted
proceedings to terminate any such Parent Benefit Plan and, to Parent's
knowledge, no condition exists that presents a risk that such proceedings will
be instituted or which would constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any such
Parent Benefit Plan and (vii) there does not exist any liability of Parent as a
result of a failure to comply with the continuation coverage requirements of
Section 601 et seq. of ERISA and Section 4980B of the Code, except where the
failure of any of the foregoing to be true would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Parent.
No Parent Benefit Plan is a Multiemployer Plan or a Multiple Employer Plan.
Neither Parent nor any of its Subsidiaries has at any time during the last six
years, (A) contributed to or been obligated to contribute to any Multiemployer
Plan or Multiple Employer Plan or (B) incurred any withdrawal liability to a
Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan, that has not been satisfied in full.
(c) Each of the Parent Benefit Plans has been operated and administered in
accordance with applicable Laws and administrative rules and regulations of any
Governmental Entity, including, but not limited to, ERISA and the Code, except
where a violation of any such Law, rule or regulation would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect on
Parent. Each of the Parent Benefit Plans intended to be "qualified" within the
meaning of Section 401(a) of the Code has received a favorable determination
letter as to such qualification from the IRS or, with respect to plans qualified
in a foreign jurisdiction, from the applicable Governmental
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Entity, and no event has occurred, either by reason of any action or failure to
act, which would cause the loss of any such qualification, except where such
action or failure to act can be cured without having, individually or in the
aggregate, a Material Adverse Effect on Parent. No Parent Benefit Plan provides
benefits, including, without limitation, death or medical benefits (whether or
not insured), with respect to current or former employees of Parent or any
Subsidiary thereof beyond their retirement or other termination of service,
other than (i) coverage mandated by applicable Law, (ii) death benefits or
retirement benefits under any "employee pension plan" (as such term is defined
in Section 3(2) of ERISA), (iii) deferred compensation benefits accrued as
liabilities on the books of Parent or any Subsidiary thereof or (iv) benefits
the full cost of which is borne by the current or former employee (or his
beneficiary). All contributions or other amounts accrued or due from Parent or
any Subsidiary thereof as of the Effective Time with respect to each Parent
Benefit Plan in respect of current or prior plan years will have been paid or
accrued by such time in accordance with GAAP.
(d) Neither Parent nor any Subsidiary thereof is a party to any collective
bargaining or other labor union contract applicable to persons employed by
Parent or any Subsidiary thereof, and no collective bargaining agreement or
other labor union contract is being negotiated by Parent or any Subsidiary
thereof. There is no labor dispute, strike, slowdown or work stoppage against
Parent or any Subsidiary thereof pending or, to the knowledge of Parent,
threatened that would, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on Parent. To the knowledge of Parent, none of
Parent, any Subsidiary thereof or their respective representatives or employees
has committed any unfair labor practices in connection with the operation of the
respective businesses of Parent or any Subsidiary thereof, and there is no
charge or complaint against Parent or any Subsidiary thereof by the National
Labor Relations Board or any comparable state or foreign agency pending or, to
the knowledge of Parent, threatened, except where such unfair labor practice,
charge or complaint would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Parent.
(e) Parent has identified in SECTION 6.9(E) of the Parent Disclosure
Statement and has made available to the Company true and complete copies of all
plans, programs or arrangements (i) to provide compensation by grant of, or to
allow the purchase of, Parent stock or stock of a predecessor employer, (ii) to
provide incentive bonuses, (iii) to allow for, or provide for, the deferral of
compensation other than through a plan described in Section 401(a) of the Code;
and with respect to all such plans, programs or arrangements, all contributions,
if any, accrued or due from Parent or any Subsidiary thereof as of the Effective
Time in respect of current or prior plan years will have been paid or accrued by
such time in accordance with GAAP. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
(either alone or in conjunction with any other event, such as termination of
employment) (A) result in any material payment (including, without limitation,
severance, unemployment compensation, golden parachute or otherwise) becoming
due to any director or any employee of Parent or any Subsidiary or Affiliate
thereof from Parent or any Subsidiary or Affiliate thereof under any Parent
Benefit Plan or otherwise, (B) materially increase any benefits otherwise
payable under any Parent Benefit Plan or (C) result in any acceleration of the
time of payment or vesting of any material benefits.
(f) Neither Parent nor any Subsidiary thereof is a party to any contract,
plan, or arrangement under which it is obligated to make or to provide, or could
become obligated to make or to provide, a payment or benefit that would be
nondeductible under Section 162(m) or 280G of the Code.
SECTION 6.10. CONTRACTS; INDEBTEDNESS.
(a) Except as disclosed in the Parent SEC Reports filed prior to the date of
this Agreement, there is no contract to which Parent or any of its Subsidiaries
is a party, or by which it or any of its properties or assets is bound, that is
material to the business, properties, assets, condition (financial or otherwise)
or operations of Parent and its Subsidiaries, taken as a whole (collectively,
"MATERIAL PARENT
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CONTRACTS"). Neither Parent nor any of its Subsidiaries is in violation of or
default under (nor has Parent or any Subsidiary thereof received written notice
(nor has any director, executive officer or general manager of Parent or any
Subsidiary received oral notice) from any third party alleging that Parent or
any of its Subsidiaries is in violation of or in default under (nor does there
exist any condition which upon the passage of time or the giving of notice would
cause such a violation of or default under)) any Material Parent Contract,
except for violations or defaults that would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect on
Parent.
(b) Neither Parent nor any of its Affiliates is a party to or is bound by
any Material Parent Contract which (i) provides that the terms thereof or any or
all of the benefits or burdens thereunder will be affected or altered
(including, without limitation, by means of acceleration) by, or are contingent
upon the execution of this Agreement or the Parent Stockholder Voting Agreement
or the consummation of the transactions contemplated hereby and thereby, or
(ii) will be subject to termination or cancellation as a result of the execution
of this Agreement or the Parent Stockholder Voting Agreement or the consummation
of the transactions contemplated hereby or thereby.
(c) SECTION 6.10(C) of the Parent Disclosure Statement sets forth (i) a list
of all agreements, instruments and other obligations pursuant to which any
indebtedness for borrowed money or capitalized lease obligations of Parent or
any of its Subsidiaries in an aggregate principal amount in excess of
$10,000,000 is outstanding or may be incurred and (ii) the respective principal
amounts outstanding thereunder as of the date of this Agreement.
SECTION 6.11. LITIGATION. As of the date hereof, there is no suit, action or
proceeding pending or, to the knowledge of Parent, threatened against or
affecting Parent or any of its Subsidiaries that, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on Parent or
prevent or materially delay the consummation of the Merger, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against or affecting Parent or any of its Subsidiaries
that, individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on Parent or prevent or materially delay the consummation of the
Merger.
SECTION 6.12. COMPLIANCE WITH APPLICABLE LAW.
(a) Parent and its Subsidiaries are in compliance in all respects with all
judgments, orders, decrees, statutes, laws, ordinances, rules and regulations
applicable to Parent, any of its Subsidiaries and their respective properties or
assets, except for instances of noncompliance that, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect on
Parent. Neither Parent nor any of its Subsidiaries has received any written
notice regarding any matter that is not fully resolved from a Governmental
Entity that alleges that Parent or any of its Subsidiaries is not in compliance
with any such judgments, orders, decrees, statutes, laws, ordinances, rules or
regulations, and Parent has and is in compliance with all Permits required for
the operation of the business of Parent and its Subsidiaries as currently
conducted (the "PARENT PERMITS"), except for those notices, instances of
noncompliance or lack of Parent Permits that, individually or in the aggregate,
are not reasonably likely to have a Material Adverse Effect on Parent.
(b) No products shipped, sold or delivered on or prior to the date hereof by
or for Parent or any of its Subsidiaries were, and no food or food ingredients
included in the inventory of Parent or any of its Subsidiaries on or prior to
the date hereof and which are used by Parent or any of its Subsidiaries were or
are, adulterated or misbranded within the meaning of the Federal Food, Drug &
Cosmetic Act and the regulations promulgated thereunder or comparable food laws
and regulations of any jurisdiction of any Governmental Entity to which such
products have been or are intended to be shipped, sold or delivered, except for
any such adulteration or misbranding which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Parent.
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SECTION 6.13. TAXES.
(a) Parent and its Subsidiaries have timely filed all income Tax Returns and
all other material United States federal, state, county, local and foreign Tax
Returns required to be filed by them. All such Tax Returns are true, correct and
complete in all material respects. Parent and its Subsidiaries have paid all
material Taxes due, other than Taxes appropriate reserves for which have been
made in Parent's financial statements included in the Parent SEC Reports filed
prior to the date of this Agreement. There are no material assessments or
adjustments that have been asserted in writing against Parent or its
Subsidiaries for any period for which Parent has not made appropriate reserves
in Parent's financial statements included in the Parent SEC Reports filed prior
to the date of this Agreement.
(b) There are no material claims, audits, examinations, investigations,
assessments or other proceedings pending against Parent or any of its
Subsidiaries for any alleged deficiency in any Tax, and Parent has not been
notified in writing of any proposed material Tax claims, audits, examinations,
investigations, assessments or other proceedings against Parent or any of its
Subsidiaries (other than, in each case, claims, audits, examinations,
investigations, assessments or other proceedings for which adequate reserves in
the Parent's financial statements included in the Parent SEC Reports filed prior
to the date of this Agreement have been established or which are being contested
in good faith or are immaterial in amount).
(c) There are no Liens for Taxes on the assets of Parent or any of its
Subsidiaries, except for statutory Liens for current Taxes not yet due and
payable and except for Liens which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent.
(d) Parent and its Subsidiaries have not waived any statute of limitations
with respect to Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(e) Neither Parent nor any of its Subsidiaries has taken or agreed to take
any action, nor do the executive officers of Parent have any knowledge of any
fact or circumstance that would prevent the Merger from qualifying as a 368
Reorganization.
(f) Parent is not, nor has it ever been, a party to any Tax sharing
agreement (except with respect to the group of which it is the common parent)
and has not assumed any material Tax liability of any other Person.
(g) To the knowledge of the executive officers of Parent, the
representations set forth in the Parent Tax Certificates attached to the Parent
Disclosure Statement are true and correct in all material respects.
SECTION 6.14. ENVIRONMENTAL MATTERS.
(a) Except as disclosed in the Parent SEC Reports filed prior to the date of
this Agreement, there is no suit, action, proceeding or inquiry pending or, to
the knowledge of Parent, threatened before any court, Governmental Entity or
other forum in which Parent, any of its Subsidiaries or any of its former
Subsidiaries or businesses has been or, with respect to threatened suits,
actions and proceedings, may be named as a defendant (i) for alleged
noncompliance with any Environmental Law with respect to any of Parent's or any
of its Subsidiaries' properties or any other properties or (ii) relating to the
release into the environment of, or human exposure to, any Hazardous Substances,
whether or not occurring at, on, under or involving a site currently or formerly
owned, leased or operated by Parent, any of its Subsidiaries or any of its
former Subsidiaries or businesses, except for any such suits, actions,
proceedings and inquiries which, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect on Parent.
(b) Except as disclosed in the Parent SEC Reports filed prior to the date of
this Agreement, (i) during the period of ownership or operation by Parent, any
of its Subsidiaries or any of its former
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Subsidiaries or businesses or any of their respective currently or formerly
owned, leased or operated properties, there have been no releases of Hazardous
Substances in, on, under or affecting such properties or, to the knowledge of
Parent, any surrounding site, except in each case for those which, individually
or in the aggregate, are not reasonably likely to have a Material Adverse Effect
on Parent, and (ii) prior to the period of ownership or operation by Parent, any
of its Subsidiaries or any of its former Subsidiaries or businesses of any of
such properties, to the knowledge of Parent, there were no releases of Hazardous
Substances in, on, under or affecting any such property or any surrounding site,
except in each case for those which, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect on Parent.
(c) Except as disclosed in the Parent SEC Reports filed prior to the date of
this Agreement, neither Parent nor any of its Subsidiaries is subject to any
order, decree, injunction or other arrangement with any Governmental Entity or
any indemnity or other agreement with any third party relating to liability
under any Environmental Law with respect to any of Parent's or any of its
Subsidiaries' properties or any other properties or relating to any Hazardous
Substances, except for any such order, decree, injunction, arrangement,
indemnity or other agreement which, individually or in the aggregate, is not
reasonably likely to have a Material Adverse Effect on Parent.
SECTION 6.15. INTELLECTUAL PROPERTY. Parent and its Subsidiaries own, or are
validly licensed or otherwise have the right to use, all Intellectual Property
that is material to the conduct of the business of Parent and its Subsidiaries
taken as a whole. No claims are pending or, to the knowledge of Parent,
threatened that Parent or any of its Subsidiaries is infringing or otherwise
adversely affecting the rights of any Person with regard to any such
Intellectual Property. To the knowledge of Parent, no Person is infringing the
rights of Parent or any of its Subsidiaries with respect to any such
Intellectual Property.
SECTION 6.16. REAL PROPERTY. SECTION 6.16 of the Parent Disclosure Statement
sets forth a list of all real properties owned or leased by Parent and its
Subsidiaries (the "PARENT REAL PROPERTY"), the nature of the interest of Parent
and its Subsidiaries and the entity which holds the interest in those
properties. There is no real property (other than the Parent Real Property), the
use or possession of which by Parent or its Subsidiaries is necessary to carry
on its business. Parent and its Subsidiaries have (i) good and marketable title
in fee simple to all Parent Real Property owned by it (the "PARENT OWNED REAL
PROPERTY") and (ii) valid leaseholds under valid and enforceable leases in all
Parent Real Property leased by it, in each case free and clear of all Liens,
other than Parent Permitted Liens, except in each case where the failure to have
the same would not have a Material Adverse Effect on Parent. None of the Parent
Real Property is subject to any lease, other than leases identified in
SECTION 6.16 of the Parent Disclosure Statement (the "PARENT LEASES"), sublease,
license or other agreement granting to any person any right to the use,
occupancy or enjoyment thereof (or any portion thereof). None of the Parent
Permitted Liens materially interferes with or has interfered with the
maintenance, use or operation of the Parent Real Property by Parent or its
Subsidiaries.
SECTION 6.17. TITLE INSURANCE. Parent has provided or made available to the
Company a true, correct and complete copy of all of the policies of title
insurance insuring the interest of Parent and its Subsidiaries in the Parent
Owned Real Property (collectively, the "PARENT TITLE POLICIES"). All of the
Parent Title Policies are in full force and effect. Neither Parent nor any of
its Subsidiaries is in material default under any provisions of the Parent Title
Policies. There is no claim by Parent, its Subsidiaries or any other person
pending under any of the Parent Title Policies as to which coverage has been
questioned, denied or disputed by the underwriters or issuers of such Parent
Title Policies.
SECTION 6.18. REQUIRED VOTE. The Parent Stockholder Approval is the only
vote of holders of capital stock of Parent that is necessary under applicable
Law or otherwise to consummate the transactions contemplated hereby.
SECTION 6.19. BROKERS, SCHEDULE OF FEES AND EXPENSE. No broker, investment
banker, financial advisor or other person, other than Credit Suisse First Boston
Corporation (the "PARENT FINANCIAL
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ADVISOR"), the fees and expenses of which will be paid by Parent, is entitled to
any broker's, finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or any of its Affiliates.
SECTION 6.20. OPINION OF FINANCIAL ADVISOR. Parent has received the opinion
of the Parent Financial Advisor to the effect that, as of the date of such
opinion, the Merger Consideration is fair to Parent from a financial point of
view. A complete and correct signed copy of such opinion has been delivered to
Parent, and such opinion has not been withdrawn or modified. Parent has been
authorized by the Parent Financial Advisor to include such opinion in the Proxy
Statement.
SECTION 6.21. MERGER SUB. Merger Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby, has engaged in no other
business activities and has conducted its operations only as contemplated
hereby. Merger Sub has no liabilities or obligations of any nature, contingent
or otherwise, other than those related to the transactions contemplated hereby.
ARTICLE VII
COVENANTS
SECTION 7.1. COMPANY INTERIM OPERATIONS. During the period from the date of
this Agreement through the Effective Time, the Company agrees as to itself and
its Subsidiaries that (except as set forth in Section 7.1 of the Company
Disclosure Statement, or as expressly contemplated or permitted by this
Agreement, or to the extent that Parent shall otherwise consent in writing,
which consent shall not be unreasonably withheld):
(a) ORDINARY COURSE. The Company shall, and shall cause its Subsidiaries to,
carry on their respective businesses in the ordinary course consistent with past
practice and shall use all reasonable efforts to preserve intact their present
business organizations, keep available the services of their officers and key
employees and preserve their relationships with customers, suppliers and others
having business dealings with the Company and its Subsidiaries with the
objective that the goodwill and ongoing business of the Company and its
Subsidiaries shall be unimpaired at the Effective Time. Neither the Company nor
any of its Subsidiaries shall (i) engage in the conduct of any business other
than its existing businesses or (ii) adopt or implement any change in its
current policies, procedures or practices with respect to accounts payable and
accounts receivable.
(b) DIVIDENDS; CHANGES IN STOCK. The Company shall not, and shall not permit
any of its Subsidiaries to, (i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock, except dividends by a
direct or indirect Wholly Owned Subsidiary of the Company to its parent entity,
(ii) split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (iii) repurchase, redeem or
otherwise acquire any shares of capital stock of the Company or its Subsidiaries
or any other securities thereof or any rights, warrants or options to acquire
any such shares or other securities.
(c) ISSUANCE OF SECURITIES. The Company shall not, and shall not permit any
of its Subsidiaries to, issue, deliver, sell, pledge or encumber, or authorize
or propose the issuance, delivery, sale, pledge or encumbrance of, any shares of
its capital stock of any class or any securities convertible into or
exchangeable for, or any rights, warrants, calls, subscriptions or options to
acquire, any such shares or convertible securities, or any other ownership
interest (including stock appreciation rights or phantom stock), other than the
issuance of Company Common Shares upon the exercise of Company Options
outstanding on the date of this Agreement and in accordance with the existing
terms of such Company Options.
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(d) GOVERNING DOCUMENTS. The Company shall not, and shall not permit any of
its Subsidiaries to, amend or propose to amend its certificate of incorporation
or its by-laws (or similar organizational documents).
(e) LIQUIDATION OR MERGER, CHANGE OF CONTROL. The Company shall not, and
shall not permit any of its Subsidiaries to, (i) adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization or (ii) enter into any agreement or
exercise any discretion providing for acceleration of payment, performance,
vesting or exercisability as a result of a change of control of the Company or
its Subsidiaries.
(f) NO ACQUISITIONS. The Company shall not, and shall not permit any of its
Subsidiaries to, acquire or agree to acquire (i) by merging or consolidating
with, or by purchasing a substantial equity interest in or substantial portion
of the assets of, or by any other manner, any business or any Person or
(ii) any assets other than acquisitions in the ordinary course of business
consistent with past practice, which are not material, individually or in the
aggregate, to the Company and its Subsidiaries taken as a whole, and
acquisitions which are for consideration that is not individually in excess of
$2.5 million and not in the aggregate in excess of $5 million.
(g) NO DISPOSITIONS. The Company shall not, and shall not permit any of its
Subsidiaries to, sell, lease, license, encumber or otherwise dispose of, or
agree to sell, lease, license, encumber or otherwise dispose of, any of its
assets, other than (i) dispositions in the ordinary course of business
consistent with past practice, which are not material, individually or in the
aggregate, to the Company and its Subsidiaries taken as a whole, and
(ii) dispositions which are for consideration that is not individually in excess
of $1 million and not in the aggregate in excess of $3 million.
(h) INDEBTEDNESS. The Company shall not, and shall not permit any of its
Subsidiaries to, (i) incur any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of the Company or any of its Subsidiaries, guarantee
any debt securities of others, enter into any "keep-well" or other agreement to
maintain any financial statement condition of another Person or enter into any
arrangement having the economic effect of any of the foregoing, except for
working capital borrowings incurred in the ordinary course of business
consistent with past practice and other indebtedness not in excess of
$5 million in the aggregate, or (ii) make any loans, advances or capital
contributions to, or investments in, any other Person, other than (A) to the
Company or any Wholly Owned Subsidiary of the Company or (B) any advances to
employees in accordance with past practice.
(i) ADVICE OF CHANGES, FILINGS. The Company shall confer with and report to
Parent, on a schedule to be mutually agreed upon, on operational matters
(including, without limitation, acquisitions and dispositions permitted by
SECTIONS 7.1(F) and (G)) and shall promptly advise Parent orally and in writing
of any Material Adverse Effect on the Company. The Company shall promptly
provide to Parent (and its counsel) copies of all filings made by the Company
with any Governmental Entity in connection with this Agreement and the
transactions contemplated hereby.
(j) TAX MATTERS. The Company shall not make any Tax election that would have
a material effect on the Tax liability of the Company or any of its Subsidiaries
or settle or compromise any material income tax liability of the Company or any
of its Subsidiaries. The Company shall, before filing or causing to be filed any
material Tax Return of the Company or any of its Subsidiaries, consult with
Parent and its advisors as to the positions and elections that may be taken or
made with respect to such return, and shall take such positions or make such
elections as the Company and Parent shall jointly agree or, failing such
agreement, shall take positions or make elections consistent with its past
practices.
(k) CAPITAL EXPENDITURES. Neither the Company nor any of its Subsidiaries
shall enter into any contracts, arrangements or understandings requiring the
purchase of equipment, materials, supplies or
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services in excess of $3 million for any individual contract, arrangement or
understanding, or $8 million for all contracts, arrangements or understandings
in the aggregate.
(l) DISCHARGE OF LIABILITIES. The Company shall not, and shall not permit
any of its Subsidiaries to, pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past practice
or in accordance with their terms, of liabilities recognized or disclosed in the
most recent consolidated financial statements (or the notes thereto) of the
Company included in the Company SEC Reports or incurred since the date of such
financial statements in the ordinary course of business consistent with past
practice.
(m) MATERIAL CONTRACTS. Neither the Company nor any of its Subsidiaries
shall (i) enter into, modify in any material respect, amend in any material
respect or terminate (A) any agreement set forth in SECTION 5.10(A), (B) or
(C) of the Company Disclosure Statement or (B) any agreement having a term
longer than one year and having an aggregate value over its term greater than
$1 million or (ii) waive, release or assign any material rights or claims.
(n) AFFILIATES. Neither the Company nor any of its Subsidiaries shall enter
into or amend or waive any right under any agreement with any Affiliate of the
Company (other than its Subsidiaries).
(o) LITIGATION. Neither the Company nor any of its Subsidiaries shall settle
or compromise any material litigation, or waive, release or assign any material
rights or claims, except in the ordinary course of business consistent with past
practice.
(p) EMPLOYEE MATTERS. Neither the Company nor any of its Subsidiaries shall
(i) grant any increases in the compensation of any of its directors, officers or
employees, except for increases required under employment agreements existing on
the date hereof and increases for officers and employees in the ordinary course
of business consistent with past practice; PROVIDED, HOWEVER, that with respect
to executive officers of the Company, no increases may be granted without the
approval of the Board of Directors of the Company or the Compensation Committee
of the Board of Directors of the Company (ii) pay or agree to pay any pension
retirement allowance or other employee benefit not required or contemplated by
any of the existing Company Benefit Plans as in effect on the date hereof to any
such director, officer or employee, whether past or present, or to any other
Person, (iii) pay or award or agree to pay or award any stock option or equity
incentive awards, (iv) enter into any new, or amend any existing, employment,
severance or termination agreement with any such director, officer or employee
or (v) except as required to comply with applicable Law, become obligated under
any new Company Benefit Plan which was not in existence on the date hereof, or
amend any such plan or arrangement in existence on the date hereof if such
amendment would have the effect of enhancing any benefits thereunder. The
Company shall, as promptly as practicable, provide Parent with copies of any
amendments to any Company Benefit Plan (which shall be in accordance with the
foregoing) made after the date hereof and prior to the Effective Time.
(q) ACCOUNTING. The Company shall not adopt any change, other than in the
ordinary course of business consistent with past practice or as required by the
SEC or by Law, in its accounting policies, procedures or practices.
(r) OTHER ACTIONS. The Company shall not, and shall not permit any of its
Subsidiaries to, take any action that would, or that would reasonably be
expected to, result in (i) any of the representations and warranties of the
Company set forth in this Agreement becoming untrue or (ii) any of the
conditions set forth in SECTION 9.1 or SECTION 9.3 not being satisfied. Neither
the Company nor any of its Subsidiaries shall authorize, recommend or propose
(other than to Parent), or announce an intention to, or enter into any contract,
agreement, commitment or arrangement to, do any of the foregoing in this
SECTION 7.1.
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SECTION 7.2. PARENT INTERIM OPERATIONS. During the period from the date of
this Agreement through the Effective Time, Parent agrees as to itself and its
Subsidiaries that (except as set forth in SECTION 7.2 of the Parent Disclosure
Statement, or as expressly contemplated or permitted by this Agreement, or to
the extent that the Company shall otherwise consent in writing, which consent
shall not be reasonably withheld):
(a) ORDINARY COURSE. Parent shall, and shall cause its Subsidiaries to,
carry on their respective businesses in the ordinary course consistent with past
practice and shall use all reasonable efforts to preserve intact their present
business organizations, keep available the services of their officers and key
employees and preserve their relationships with customers, suppliers and others
having business dealings with Parent and its Subsidiaries with the objective
that the goodwill and ongoing business of Parent and its Subsidiaries shall be
unimpaired at the Effective Time. Neither Parent nor any of its Subsidiaries
shall (i) engage in the conduct of any business other than its existing
businesses or (ii) adopt or implement any change in its current policies,
procedures or practices with respect to accounts payable and accounts
receivable.
(b) DIVIDENDS, CHANGES IN STOCK. Parent shall not, and shall not permit any
of its Subsidiaries to, (i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock, except (A) regular
periodic cash dividends on outstanding Parent Common Shares, consistent with
past practice, and (B) dividends by a direct or indirect Wholly Owned Subsidiary
of Parent to its parent entity, (ii) split, combine or reclassify any of its
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) repurchase, redeem or otherwise acquire any shares of
capital stock of Parent or its Subsidiaries or any other securities thereof or
any rights, warrants or options to acquire any such shares or other securities.
(c) ISSUANCE OF SECURITIES. Parent shall not, and shall not permit any of
its Subsidiaries to, issue, deliver, sell, pledge or encumber, or authorize or
propose the issuance, delivery, sale, pledge or encumbrance of, any shares of
its capital stock of any class or any securities convertible into or
exchangeable for, or any rights, warrants, calls, subscriptions or options to
acquire, any such shares or convertible securities, or any other ownership
interest (including stock appreciation rights or phantom stock), other than
(i) the issuance of Parent Common Shares upon the exercise of Parent Options
outstanding on the date of this Agreement and in accordance with the existing
terms of such Parent Options, (ii) the issuance of Parent Options to employees
of Parent or any of its Subsidiaries in the ordinary course consistent with past
practice and (iii) the issuance of Parent Common Shares in connection with
acquisitions permitted by this Agreement.
(d) GOVERNING DOCUMENTS. Parent shall not, and shall not permit any of its
Subsidiaries to, amend or propose to amend its certificate of incorporation or
its by-laws (or similar organizational documents), except for the Parent by-law
amendments contemplated hereby.
(e) LIQUIDATION OR MERGER, CHANGE OF CONTROL. Parent shall not, and shall
not permit Pepsi-Cola General Bottlers, Inc. to, (i) adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization or (ii) enter into any agreement or
exercise any discretion providing for acceleration of payment, performance,
vesting or exercisability as a result of a change of control of Parent.
(f) NO ACQUISITIONS. Parent shall not, and shall not permit any of its
Subsidiaries to, acquire or agree to acquire (i) by merging or consolidating
with, or by purchasing a substantial equity interest in or substantial portion
of the assets of, or by any other manner, any business or any Person or
(ii) any assets other than acquisitions in the ordinary course of business
consistent with past practice, which are not material, individually or in the
aggregate, to Parent and its Subsidiaries taken as a whole, and acquisitions
which are for consideration that is not individually in excess of $40 million
and not in the aggregate in excess of $75 million.
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(g) NO DISPOSITIONS. Parent shall not, and shall not permit any of its
Subsidiaries to, sell, lease, license, encumber or otherwise dispose of, or
agree to sell, lease, license, encumber or otherwise dispose of, any of its
assets, other than (i) dispositions in the ordinary course of business
consistent with past practice, which are not material, individually or in the
aggregate, to Parent and its Subsidiaries taken as a whole, and
(ii) dispositions which are for consideration that is not individually in excess
of $10 million and not in the aggregate in excess of $50 million.
(h) INDEBTEDNESS. Parent shall not, and shall not permit any of its
Subsidiaries to, make any loans, advances or capital contributions to, or
investments in, any other Person, other than (i) to Parent or any Wholly Owned
Subsidiary of Parent or (ii) any advances to employees in accordance with past
practice.
(i) ADVICE OF CHANGES, FILINGS. Parent shall confer with and report to the
Company, on a schedule to be mutually agreed upon, on operational matters
(including, without limitation, acquisitions and dispositions permitted by
SECTIONS 7.2(F) and (G)) and shall promptly advise the Company orally and in
writing of any Material Adverse Effect on Parent. Parent shall promptly provide
to the Company (and its counsel) copies of all filings made by Parent with any
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby.
(j) MATERIAL CONTRACTS. Neither the Parent nor any of its Subsidiaries shall
(i) enter into, modify in any material respect, amend in any material respect or
terminate (A) any agreement set forth in SECTION 6.10(A), (B) or (C) of the
Parent Disclosure Statement or (B) any agreement having a term longer than one
year and having a value greater than $2.5 million per year, in each case other
than agreements with suppliers consistent with past practice, or (ii) waive,
release or assign any material rights or claims.
(k) AFFILIATES. Neither the Parent nor any of its Subsidiaries shall enter
into or amend or waive any right under any agreement with any Affiliate of
Parent (other than its Subsidiaries).
(l) EMPLOYEE MATTERS. Neither Parent nor any of its Subsidiaries shall
(i) grant any increases in the compensation of any of its directors, officers or
employees, except for increases required under employment agreements existing on
the date hereof and increases for officers and employees in the ordinary course
of business consistent with past practice, (ii) pay or agree to pay any pension
retirement allowance or other employee benefit not required or contemplated by
any of the existing Parent Benefit Plans as in effect on the date hereof to any
such director, officer or employee, whether past or present, or to any other
Person, (iii) pay or award or agree to pay or award any stock option or equity
incentive awards, other than in the ordinary course consistent with past
practice, (iv) enter into any new, or amend any existing, employment, severance
or termination agreement with any such director, officer or employee, other than
in the ordinary course consistent with past practice, or (v) except as required
to comply with applicable Law, become obligated under any new Parent Benefit
Plan which was not in existence on the date hereof, or amend any such plan or
arrangement in existence on the date hereof if such amendment would have the
effect of enhancing any benefits thereunder; PROVIDED, HOWEVER, that with
respect to executive officers of Parent, no action otherwise permitted by
clauses (i) through (iv) of this SECTION 7.2(L) may be taken without the
approval of the Board of Directors of Parent or the Management and Compensation
Committee of the Board of Directors of Parent. Parent shall, as promptly as
practicable, provide the Company with copies of any amendments to any Parent
Benefit Plan (which shall be in accordance with the foregoing) made after the
date hereof and prior to the Effective Time.
(m) OTHER ACTIONS. Parent shall not, and shall not permit any of its
Subsidiaries to, take any action that would, or that could reasonably be
expected to, result in (i) any of the representations and warranties of Parent
set forth in this Agreement becoming untrue or (ii) any of the conditions set
forth in SECTION 9.1 or SECTION 9.2 not being satisfied. Neither Parent nor any
of its Subsidiaries shall authorize, recommend or propose (other than to the
Company), or announce an intention to, or enter
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into any contract, agreement, commitment or arrangement to, do any of the
foregoing in this SECTION 7.2.
SECTION 7.3. NO SOLICITATION.
(a) Each of the Company and Parent immediately shall cease and cause to be
terminated all existing discussions or negotiations with any Persons conducted
heretofore with respect to, or that could reasonably be expected to lead to, any
Takeover Proposal. From the date hereof until the Effective Time or earlier
termination of this Agreement, neither Parent nor the Company shall, nor shall
either permit any of its Subsidiaries to, nor shall either authorize or permit
any of its or any of its Subsidiaries' officers, directors, employees,
authorized representatives and authorized agents to, (i) solicit, initiate or
encourage the submission of any Takeover Proposal, (ii) enter into any agreement
with respect to a Takeover Proposal or (iii) participate in any discussions or
negotiations regarding, or furnish to any Person any information with respect
to, or take any other action to facilitate any inquiries or the making of, any
proposal that constitutes, or that could reasonably be expected to lead to, any
Takeover Proposal; PROVIDED, HOWEVER, that if, at any time prior to the
Effective Time, the Board of Directors of the Company or Parent, as the case may
be, determines in good faith, after consultation with outside counsel, that its
fiduciary obligations to its respective stockholders under applicable Laws so
require, the Company or Parent, as the case may be, in response to a Takeover
Proposal which was not solicited subsequent to the date hereof, (A) may furnish
to any Person information with respect to the Company or Parent, as the case may
be, pursuant to a customary confidentiality agreement, (B) may participate in
negotiations regarding such Takeover Proposal and (C) subject to full compliance
with this SECTION 7.3 and SECTION 8.2, may recommend a Superior Proposal to its
stockholders.
(b) Each of the Company and Parent shall immediately advise the other party
orally and in writing of any Takeover Proposal and any request for information
with respect to any Takeover Proposal, the material terms and conditions of such
request or Takeover Proposal and the identity of the Person making such request
or Takeover Proposal. Each of the Company and Parent will keep the other party
fully and promptly informed of the status and details (including amendments or
proposed amendments) of any such request or Takeover Proposal.
(c) Except as set forth in this SECTION 7.3, neither the Board of Directors
of the Company or Parent, as the case may be, nor any committee thereof shall
(i) withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to the other party, the approval or recommendation by such Board of
Directors or such committee of the Merger, this Agreement or the Share Issuance,
(ii) approve or recommend, or propose publicly to approve or recommend, any
Takeover Proposal or (iii) cause the Company or Parent, as the case may be, to
enter into any letter of intent, agreement in principle, acquisition agreement
or other similar agreement related to any Takeover Proposal. Notwithstanding the
foregoing, but subject to compliance with SECTION 8.2, in the event that the
Board of Directors of the Company or Parent, as the case may be, has fully
complied with this SECTION 7.3 and determines that a Superior Proposal exists,
the Board of Directors of the Company or Parent, as the case may be, to the
extent required by the fiduciary obligations thereof, as determined in the good
faith judgment of such Board of Directors based on the advice of outside
counsel, may withdraw or modify its approval or recommendation of the Merger,
this Agreement or the Share Issuance; PROVIDED, HOWEVER, that nothing contained
herein (including any such withdrawal or modification of such approval or
recommendation) shall release or otherwise affect (A) the Company's obligation
under SECTION 8.2(A) to call and hold the Company Stockholders' Meeting and
submit the Merger and this Agreement to the stockholders of the Company for
their approval or (B) Parent's obligation under SECTION 8.2(B) to call and hold
the Parent Stockholders' Meeting and submit the Share Issuance to the
stockholders of Parent for their approval.
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(d) Nothing contained in this SECTION 7.3 shall prohibit the Company or
Parent from taking and disclosing to its respective stockholders a position
contemplated by Rules 14d-9 or 14e-2 promulgated under the Exchange Act or from
making any disclosure to its respective stockholders if, in the good faith
judgment of its Board of Directors, after consultation with outside counsel,
such disclosure is required by its fiduciary duties to its respective
stockholders under applicable Law or is otherwise required under applicable Law.
SECTION 7.4. THIRD PARTY STANDSTILL AGREEMENTS. During the period from the
date hereof until the Effective Time or earlier termination of this Agreement,
neither the Company nor Parent shall terminate, amend, modify or waive any
provision of any confidentiality or standstill agreement to which the Company,
Parent or any of their respective Subsidiaries is a party. During such period,
each of the Company and Parent agrees to enforce, to the fullest extent
permitted under applicable Law, the provisions of any such agreements,
including, but not limited to, obtaining injunctions to prevent any breaches of
such agreements and to enforce specifically the terms and provisions thereof in
any court of the United States or any state thereof having jurisdiction.
SECTION 7.5. CERTAIN LITIGATION. Each of the Company and Parent agrees that
it shall not settle any litigation commenced after the date hereof against the
Company or Parent, as the case may be, or any of its directors by any
stockholder of the Company or Parent relating to the Merger, this Agreement, the
Company Stockholder Voting Agreement or the Parent Stockholder Agreement,
without the prior written consent of the other party hereto. Neither the Company
nor Parent shall voluntarily cooperate with any third party that may hereafter
seek to restrain or prohibit or otherwise oppose the Merger, and each of the
Company and Parent shall cooperate with the other parties hereto to resist any
such effort to restrain or prohibit or otherwise oppose the Merger.
SECTION 7.6. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) From and after the Effective Time, Parent shall, or shall cause the
Surviving Corporation to, indemnify, defend and hold harmless each present and
former director and officer of the Company and each Subsidiary of the Company,
and each such Person who served at the request of the Company or any Subsidiary
of the Company as a director, officer, trustee, partner, fiduciary, employee or
agent of another corporation, partnership, joint venture, trust, pension or
other employee benefit plan or enterprise (collectively, the "INDEMNIFIED
PARTIES"), against all Losses and Expenses in connection with any claim, action,
suit, proceeding or investigation (each a "CLAIM"), whether civil,
administrative or investigative, to the extent that any such Claim is based on
or arises out of: (i) the fact that such Indemnified Party is or was a director
or officer of the Company or any of its Subsidiaries or is or was serving at the
request of the Company or any of its Subsidiaries as a director, officer,
trustee, partner, fiduciary, employee or agent of another corporation,
partnership, joint venture, trust, pension or other employee benefit plan or
enterprise; or (ii) this Agreement or any of the transactions contemplated
hereby, in each case to the extent that any such Claim pertains to any matter or
fact arising, existing or occurring prior to or at the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the full extent
permitted under applicable Law, the Company Charter or the certificate of
incorporation of the Subsidiary, as the case may be, or the by-laws of the
Company or the Subsidiary, as the case may be, as in effect of the date hereof
(and Parent shall, or shall cause the Surviving Corporation to, advance expenses
as incurred to the fullest extent permitted under applicable Law); PROVIDED,
HOWEVER, that neither Parent nor the Surviving Corporation shall be required to
indemnify any Indemnified Party in connection with any proceeding (or portion
thereof) involving any Claim initiated by such Indemnified Party unless the
initiation of such proceeding (or portion thereof) was authorized by the Board
of Directors of Parent or unless such proceeding is brought by any Indemnified
Party to enforce rights under this SECTION 7.6.
(b) Parent and the Company agree that all rights to indemnification, and all
limitations of liability with respect thereto, existing in favor of any
Indemnified Party, as provided in the Company Charter or
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the certificate of incorporation of the Subsidiary, as the case may be, or
by-laws of the Company or the Subsidiary, as the case may be, in effect at the
date hereof, shall survive the Merger and shall continue in full force and
effect, without any amendment thereto, for a period of six years after the
Effective Time to the extent such rights and limitations of liability are
consistent with applicable Law; PROVIDED, HOWEVER, that in the event any Claim
is asserted or made within such six-year period, all such rights and limitations
of liability in respect of any such Claim shall continue until disposition
thereof; PROVIDED, FURTHER, that any determination required to be made with
respect to whether an Indemnified Party's conduct complies with the standards
set forth under applicable Law, the Company Charter or the certificate of
incorporation of the Subsidiary, as the case may be, or the by-laws of the
Company or the Subsidiary, as the case may be, shall be made by independent
legal counsel selected by such Indemnified Party and reasonably acceptable to
Parent; and provided, further, that nothing in this SECTION 7.6 shall impair any
rights or obligations of any present or former director or officer of the
Company.
(c) Parent or the Surviving Corporation shall maintain the Company's
existing directors' and officers' liability insurance policies (true and
complete copies of which have been made available to Parent) for a period of not
less than six years after the Effective Time; PROVIDED, HOWEVER, that Parent or
the Surviving Corporation may substitute therefor policies of similar coverage
and amounts containing terms no less advantageous to such former directors and
officers; PROVIDED, FURTHER, that if the existing insurance policies expire or
are canceled during such period, Parent or the Surviving Corporation shall use
all reasonable efforts to obtain similar insurance; and PROVIDED, FURTHER, that
neither Parent nor the Surviving Corporation shall be required to pay an annual
premium for such insurance in excess of 200% of the last annual premium paid by
the Company prior to the date hereof, but in such case shall purchase as much
coverage as possible for such amount (it being understood that Parent or the
Surviving Corporation may satisfy its obligations under this SECTION 7.6 by
purchasing a "tail" policy that provides the required coverage).
(d) The provisions of this SECTION 7.6 are intended to be for the benefit
of, and shall be enforceable by, each of the Indemnified Parties, their heirs
and personal representatives.
SECTION 7.7. LISTING OF PARENT COMMON SHARES. Parent shall use its
reasonable best efforts to cause the Parent Common Shares to be issued in the
Merger or otherwise pursuant to this Agreement, including Parent Common Shares
issuable upon (a) the exercise of Company Options and Company Warrants which
will be converted into Parent Options and Parent Warrants, respectively,
pursuant to SECTION 3.3, (b) the payment of the Contingent Payments and (c) the
purchase of the Subscription Shares, to be listed for trading on the NYSE and on
the Chicago and Pacific Stock Exchanges, subject to official notice of issuance.
SECTION 7.8. EMPLOYEE BENEFITS.
(a) OBLIGATIONS OF PARENT; COMPARABILITY OF BENEFITS. For a period of one
year immediately following the Effective Time, the coverage and benefits
provided to employees and former employees of the Company and its Subsidiaries
("COMPANY EMPLOYEES") pursuant to employee benefit plans or arrangements
maintained by Parent, the Company, or any Subsidiary of Parent shall be no less
favorable, in the aggregate, than those provided to such employees immediately
prior to the Effective Time. Notwithstanding the foregoing, nothing herein shall
require (i) the continuation of any particular Parent, Subsidiary or Company
benefit plan or prevent the amendment or termination thereof (subject to the
maintenance, in the aggregate, of the benefits as provided in the preceding
sentence) or (ii) Parent or the Surviving Corporation to continue or maintain
any stock option, stock purchase or other incentive plan related to the equity
of the Company or the Surviving Corporation.
(b) PRE-EXISTING LIMITATIONS; DEDUCTIBLE; SERVICE CREDIT. With respect to
any incentive, benefits and perquisite plans and programs ("BENEFIT PLANS") in
which the Company Employees participate effective as of the Effective Time,
Parent shall, or shall cause the Surviving Corporation to, (i) waive any
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limitations as to pre-existing conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Company
Employees under which any welfare Benefit Plan in which such Company Employees
may be eligible to participate after the Effective Time (PROVIDED, HOWEVER, that
no such waiver shall apply to a pre-existing condition, exclusion or waiting
period applicable to any Company Employee to the extent that he or she was, as
of the Effective Time, excluded from participation or coverage in a Company
Benefit Plan by nature of such pre-existing condition, exclusion or waiting
period), (ii) provide each Company Employee with credit for any co-payments and
deductibles paid prior to the Effective Time in satisfying any applicable
deductible or out-of-pocket requirements under any welfare Parent Benefit Plan
in which such employees may be eligible to participate after the Effective Time,
and (iii) recognize all service of the Company Employees with the Company, for
all purposes other than benefit accrual, in any Parent Benefit Plan in which
such Company Employees may be eligible to participate after the Effective Time.
Prior to the Effective Time, the Board of Directors of Parent, or an appropriate
committee of non-employee directors thereof, shall adopt a resolution consistent
with the interpretive guidance of the SEC so that the acquisition by any officer
or director of the Company who may become a covered person of Parent for
purposes of Section 16 of the Exchange Act and the rules and regulations
thereunder ("SECTION 16") of Parent Common Shares or options to acquire Parent
Common Shares pursuant to this Agreement and the Merger shall be an exempt
transaction for purposes of Section 16.
(c) As of the Effective Time, Parent shall assume and honor and shall cause
the Surviving Corporation to honor in accordance with their terms all
employment, severance and other such agreements listed in SECTION 5.9(E) of the
Company Disclosure Statement (the "EXECUTIVE AGREEMENTS"), except as otherwise
expressly agreed between Parent and such Person.
SECTION 7.9. PAYMENT OF DIVIDENDS. Parent shall not declare dividends on
Parent Common Shares having a record date after any Contingent Share Earned Date
but prior to the corresponding date on which certificates representing the
Contingent Payments shall have been delivered to the Exchange Agent pursuant to
SECTION 4.3(A).
ARTICLE VIII
ADDITIONAL ARRANGEMENTS
SECTION 8.1. REGISTRATION STATEMENT, PROXY STATEMENT.
(a) As promptly as practicable after the execution of this Agreement, Parent
and the Company shall prepare and file with the SEC a joint proxy statement
relating to the Company Stockholders' Meeting and the Parent Stockholders'
Meeting (together with any amendments thereof or supplements thereto, the "PROXY
STATEMENT"), and, if required under the Exchange Act, a Transaction Statement on
Schedule 13E-3 (together with any amendments thereof, the "SCHEDULE 13E-3"), and
Parent shall prepare and file with the SEC a registration statement on Form S-4
(together with all amendments thereto, the "REGISTRATION STATEMENT") in which
the Proxy Statement shall be included as a prospectus, in connection with the
registration under the Securities Act of the Parent Common Shares to be issued
to the stockholders of the Company pursuant to the Merger, including Parent
Common Shares issuable upon (i) the exercise of Company Options which will be
converted into Parent Options pursuant to SECTION 3.3(A), (ii) the payment of
the Contingent Payments and (iii) the purchase of the Subscription Shares. Each
of Parent and the Company will use all reasonable efforts to cause the
Registration Statement to become effective as promptly as practicable, and,
prior to the effective date of the Registration Statement, Parent shall take all
or any action required under any applicable federal or state securities laws in
connection with the issuance of Parent Common Shares in the Merger. Each of
Parent and the Company shall furnish all information concerning it and the
holders of its capital stock as the other may reasonably request in connection
with such actions and the preparation of the Registration Statement, the Proxy
Statement and, if required, the Schedule 13E-3. As promptly as practicable after
the Registration Statement shall have become effective, each of the Company and
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Parent shall mail the Proxy Statement to its stockholders. The Proxy Statement
shall include the recommendation of the Board of Directors of the Company in
favor of the Merger and the recommendation of the Board of Directors of Parent
in favor of the Share Issuance.
No amendment or supplement to the Proxy Statement, the Registration
Statement or, if required, the Schedule 13E-3 will be made by Parent or the
Company without the approval of the other party (which approval shall not be
unreasonably withheld or delayed). Parent and the Company each will advise the
other, promptly after it receives notice thereof, of any request by the SEC for
amendment of the Proxy Statement, the Registration Statement or, if required,
the Schedule 13E-3, or comments thereon and responses thereto, or requests by
the SEC for additional information. Each of Parent and the Company will use all
reasonable efforts to prepare and file any such amendments and/or respond to any
such requests as promptly as possible. Parent shall advise the Company, promptly
after it receives notice thereof, of the time when the Registration Statement
has become effective or any supplement or amendment has been filed, of the
issuance of any stop order or of the suspension of the qualification of the
Parent Common Shares issuable in connection with the Merger for offering or sale
in any jurisdiction.
(b) The information supplied by Parent for inclusion in the Registration
Statement, the Proxy Statement and, if required, the Schedule 13E-3 shall not,
at (i) the time the Registration Statement is declared effective, (ii) the time
the Proxy Statement (or any amendment thereof or supplement thereto) is first
mailed to the stockholders of the Company, (iii) the time the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to stockholders
of Parent, (iv) the time of the Company Stockholders' Meeting, (v) the time of
the Parent Stockholders' Meeting and (vi) the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. If at any time
prior to the Effective Time any event or circumstance relating to Parent or any
of its Subsidiaries, or their respective officers or directors, should be
discovered by Parent which should be set forth in an amendment or a supplement
to the Registration Statement, Proxy Statement or, if required, the
Schedule 13E-3, Parent shall promptly inform the Company. All documents that
Parent is responsible for filing with the SEC in connection with the
transactions contemplated herein will comply as to form and substance in all
material respects with the applicable requirements of the Securities Act, the
Exchange Act and the rules and regulations thereunder.
(c) The information supplied by the Company for inclusion in the
Registration Statement, the Proxy Statement and, if required, the
Schedule 13E-3 shall not, at (i) the time the Registration Statement is declared
effective, (ii) the time the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to the stockholders of the Company,
(iii) the time the Proxy Statement (or any amendment thereof or supplement
thereto) is first mailed to stockholders of Parent, (iv) the time of the Company
Stockholders' Meeting, (v) the time of the Parent Stockholders' Meeting and
(vi) the Effective Time, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. If at any time prior to the Effective Time any event
or circumstance relating to the Company or any of its Subsidiaries, or their
respective officers or directors, should be discovered by the Company which
should be set forth in an amendment or a supplement to the Registration
Statement, Proxy Statement or, if required, the Schedule 13E-3, the Company
shall promptly inform Parent. All documents that the Company is responsible for
filing with the SEC in connection with the transactions contemplated herein will
comply as to form and substance in all material respects with the applicable
requirements of the Securities Act, the Exchange Act and the rules and
regulations thereunder.
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SECTION 8.2. STOCKHOLDERS' MEETINGS.
(a) COMPANY STOCKHOLDERS' MEETING. The Company shall call and hold a meeting
of its stockholders (the "COMPANY STOCKHOLDERS' MEETING") as promptly as
practicable for the purpose of voting upon the approval of this Agreement and
the Merger and at such meeting shall submit to the stockholders of the Company
for their approval the Merger and this Agreement, and the Company shall use its
best efforts to hold the Company Stockholders' Meeting as soon as practicable
after the date on which the Registration Statement becomes effective. The
Company shall, through its Board of Directors, recommend to the holders of
Company Common Shares approval of the Merger and this Agreement and shall not
withdraw or modify such recommendation, unless otherwise permitted by
SECTION 7.3.
(b) PARENT STOCKHOLDERS' MEETING. Parent shall call and hold a meeting of
its stockholders (the "PARENT STOCKHOLDERS' MEETING") as promptly as practicable
for the purpose of voting upon the approval of the Share Issuance and at such
meeting shall submit to the stockholders of Parent for their approval the Share
Issuance, and Parent shall use its best efforts to hold the Parent Stockholders'
Meeting as soon as practicable after the date on which the Registration
Statement becomes effective. Parent shall, through its Board of Directors,
recommend to the holders of Parent Common Shares approval of the Share Issuance
and shall not withdraw or modify such recommendation, unless otherwise permitted
by SECTION 7.3.
SECTION 8.3. ACCESS TO INFORMATION. Except as required pursuant to any
confidentiality agreement or similar agreement or arrangement to which the
Company or Parent or any of their respective Subsidiaries is a party (which such
Person shall use reasonable best efforts to cause the counterparty thereto to
waive) or pursuant to applicable Law or the regulations or requirements of any
stock exchange or other regulatory organization with whose rules the parties are
required to comply, from the date of this Agreement to the Effective Time, each
party shall (and shall cause its Subsidiaries to): (i) provide to the other
party (and its officers, directors, employees, accountants, consultants, legal
counsel, agents and other representatives, collectively, "REPRESENTATIVES")
access at reasonable times upon prior notice to the officers, employees, legal
counsel, accountants, consultants, agents and other representatives, properties,
offices and other facilities of such party and its Subsidiaries and to the books
and records thereof and (ii) furnish promptly such information concerning the
business, properties, contracts, assets, liabilities, personnel and other
aspects of such party and its Subsidiaries as the other party or its
Representatives may reasonably request. No investigation conducted pursuant to
this SECTION 8.3 shall affect or be deemed to modify any representation or
warranty made in this Agreement. Each party will hold any information so
obtained which is non-public in accordance with the provisions of the
Confidentiality Agreement.
SECTION 8.4. REASONABLE BEST EFFORTS. Each of the Company, Parent and Merger
Sub agrees to use its reasonable best efforts to take, or cause to be taken, all
actions necessary to comply promptly with all legal requirements that may be
imposed on itself with respect to the Merger (which actions shall include
furnishing all information required under the HSR Act and in connection with
approvals of or filings with any other Governmental Entity) and shall promptly
cooperate with and furnish information to each other in connection with any such
requirements imposed upon any of them or any of their Subsidiaries in connection
with the Merger. Each of the Company, Parent and Merger Sub shall, and shall
cause its Subsidiaries to, use its reasonable best efforts to take all actions
necessary to obtain (and shall cooperate with each other in obtaining) any
consent, authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party required to be
obtained or made by Parent, Merger Sub, the Company or any of their Subsidiaries
in connection with the Merger or the taking of any action contemplated thereby
or by this Agreement; PROVIDED, that neither party shall be required to agree to
waive any substantial rights or to accept any substantial limitation on its
operations or to dispose of any material assets in connection with obtaining any
such consent, authorization, order, approval or exemption.
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SECTION 8.5. NOTICES OF CERTAIN EVENTS. Each of the Company and Parent shall
promptly notify the other party of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement;
(b) any notice or other communication from any Governmental Entity in
connection with the transactions contemplated by this Agreement;
(c) the occurrence or non-occurrence of any event, the occurrence or
nonoccurrence of which would reasonably be expected to cause any representation
or warranty contained herein to be untrue or inaccurate in any material respect
at any time during the period commencing on the date hereof and ending at the
Effective Time; and
(d) any failure of such party to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
PROVIDED, HOWEVER, that the delivery of any notice pursuant to this SECTION 8.5
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
SECTION 8.6. TAX-FREE REORGANIZATION.
(a) Prior to the Effective Time, each party shall use its reasonable best
efforts to cause the Merger to qualify as a reorganization within the meaning of
the provisions of Section 368 of the Code ("368 REORGANIZATION") and shall not
knowingly take any action that would cause the Merger not to so qualify. Parent
shall not knowingly take, or knowingly cause the Surviving Corporation to take,
any action after the Effective Time that would cause the Merger not to qualify
as a 368 Reorganization.
(b) Each party shall use its reasonable best efforts to obtain the opinions
referred to in SECTIONS 9.2(C) and 9.3(C).
SECTION 8.7. PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect,
the Company and Parent shall consult with each other before issuing any press
release or making any other statement intended for general public dissemination
with respect to this Agreement or the transactions contemplated hereby and,
subject to the immediately following sentence, shall not issue any such press
release or make any such other statement without the prior consent of the other
party, which consent shall not be unreasonably withheld. Notwithstanding the
foregoing, any such press release or other statement as may be required by
applicable Law or any listing agreement with any national securities exchange
may be issued without such consent, if the party making such release or
statement has used its reasonable efforts to consult with the other party.
SECTION 8.8. AFFILIATES OF THE COMPANY. Within thirty (30) days following
the date of this Agreement, the Company shall deliver to Parent a letter
identifying all known Persons who may be deemed affiliates of the Company under
Rule 145 of the Securities Act (a "RULE 145 AFFILIATE"). The Company shall use
its best efforts to obtain a written agreement from each Rule 145 Affiliate as
soon as practicable and, in any event, at least thirty (30) days prior to the
Effective Time, substantially in the form of EXHIBIT C hereto.
SECTION 8.9. BOARD OF DIRECTORS; CHIEF EXECUTIVE OFFICER OF PARENT.
Immediately prior to the Effective Time, the Board of Directors of Parent will
take all necessary action (a) to expand the size of its Board of Directors by
one member and to appoint, as of the Effective Time, Robert Pohlad to such Board
and (b) to elect, as of the Effective Time, Robert Pohlad as Chief Executive
Officer of Parent.
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SECTION 8.10. AMENDMENT OF PEPSICO SHAREHOLDER AGREEMENT AND PARENT BY-LAWS;
POHLAD COMPANIES SHAREHOLDER AGREEMENT. Prior to the Effective Time:
(a) Parent and PepsiCo shall enter into the Amended and Restated Shareholder
Agreement substantially in the form of EXHIBIT D hereto (the "AMENDED AND
RESTATED PEPSICO SHAREHOLDER AGREEMENT").
(b) Parent shall adopt the amendment to Parent's by-laws substantially in
the form of EXHIBIT E hereto.
(c) Parent and Pohlad Companies (and its Affiliates) shall enter into a
shareholder agreement substantially in the form of EXHIBIT F hereto (the "POHLAD
COMPANIES SHAREHOLDER AGREEMENT").
SECTION 8.11. REDEMPTION OF SERIES AA PREFERRED STOCK. The Company shall
cause all of the outstanding shares of Series AA Preferred Stock of Delta
Beverage Group, Inc. to be redeemed and retired not later than the Effective
Time, it being understood that in connection therewith, Parent agrees to
provide, at the Closing, funds in an amount not to exceed $32,179,655 plus any
accrued but unpaid dividends to pay the holders of such shares in exchange
therefor or to reimburse the Company for making such payments to such holders.
ARTICLE IX
CONDITIONS PRECEDENT
SECTION 9.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction prior to the Closing Date of the following conditions:
(a) COMPANY STOCKHOLDER APPROVAL. Each of the Company Stockholder Approval
and the Parent Stockholder Approval shall have been obtained.
(b) HSR PERIOD. The waiting period (and any extension thereof) applicable to
the consummation of the Merger under the HSR Act shall have expired or been
terminated.
(c) NO INJUNCTIONS OR RESTRAINTS. No statute, rule, regulation, executive
order, decree, temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or other
Governmental Entity or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; PROVIDED, HOWEVER, that each of
the parties shall have used reasonable efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any injunction
or other order that may be entered, subject to the provisos set forth in the
last sentence of SECTION 8.4.
(d) REGISTRATION STATEMENT. The Registration Statement shall have been
declared effective and shall be effective at the Effective Time, and no stop
order suspending effectiveness shall have been issued, and no action, suit,
proceeding or investigation by the SEC to suspend the effectiveness thereof
shall have been initiated and be continuing, and all necessary approvals under
state securities laws and the Securities Act or the Exchange Act relating to the
issuance or trading of the Parent Common Shares shall have been received.
(e) LISTING OF PARENT SHARES. The Parent Common Shares required to be issued
hereunder shall have been approved for listing on the NYSE and on the Chicago
and Pacific Stock Exchanges, subject only to official notice of issuance.
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(f) OTHER AUTHORIZATIONS. The consents set forth on Schedule I to this
Agreement and all other consents, approvals, authorizations, exemptions and
filings required by any Governmental Entity and any other Persons in connection
with the Merger and the transactions contemplated hereby shall have been
obtained or made, except to the extent the failure to obtain or make such
consents, approvals, authorizations, exemptions or filings would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company or on Parent.
SECTION 9.2. CONDITIONS TO THE COMPANY'S OBLIGATION TO EFFECT THE MERGER.
The obligation of the Company to effect the Merger shall be subject to the
satisfaction at or prior to the Closing Date of the following additional
conditions:
(a) PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND WARRANTIES. (i) Each of
Parent and Merger Sub shall have performed in all material respects each of
their agreements contained in this Agreement required to be performed on or
prior to the Effective Time, (ii) each of the representations and warranties of
Parent and Merger Sub contained in this Agreement that is qualified by
materiality shall be true and correct on and as of the Closing Date as if made
on and as of such date (other than to the extent that any such representation
and warranty, by its terms, is expressly limited to a specific date, in which
case such representation and warranty shall be true and correct as of such date)
and (iii) each of the representations and warranties that is not so qualified
shall be true and correct in all material respects on and as of the Closing Date
as if made on and as of such date (other than to the extent that any such
representation and warranty, by its terms, is expressly limited to a specific
date, in which case such representation and warranty shall be true and correct
in all material respects as of such date), in each case, except as contemplated
or permitted by this Agreement.
(b) OFFICER'S CERTIFICATE. Parent shall have furnished to the Company a
certificate, dated the Closing Date, signed on behalf of Parent by an executive
officer of Parent, certifying to the effect that the conditions set forth in
SECTION 9.2(A) have been satisfied in full.
(c) TAX OPINION. The Company shall have received an opinion of Briggs and
Morgan, P.A., in form and substance reasonably satisfactory to the Company, on
the basis of certain facts, representations and assumptions set forth in such
opinion, dated the Effective Time, to the effect that the Merger will be treated
for federal income tax purposes as a 368 Reorganization and that each of Parent,
Merger Sub and the Company will be a party to the reorganization within the
meaning of Section 368 of the Code. In rendering such opinion, such counsel
shall receive and be entitled to rely upon certain documentation including
representations contained in a certificate of Parent (the "PARENT TAX
CERTIFICATE") substantially in the form attached to the Parent Disclosure
Statement, a certificate of the Company (the "COMPANY TAX CERTIFICATE")
substantially in the form attached to the Company Disclosure Statement, a
certificate of Dakota Holdings (the "SHAREHOLDER TAX CERTIFICATE") substantially
in the form attached to the Company Disclosure Statement and other appropriate
certificates of Parent, the Company and other Persons.
(d) SECRETARIES' CERTIFICATES. Parent shall have furnished to the Company
(i) copies of the text of the resolutions by which the corporate action on the
part of Parent necessary to approve this Agreement, the Company Stockholder
Voting Agreement and the transactions contemplated hereby and thereby were
taken; (ii) certificates dated as of the Closing Date executed on behalf of
Parent by its corporate secretary certifying to the Company that such copies are
true, correct and complete copies of such resolutions and that such resolutions
were duly adopted and have not been amended or rescinded; (iii) copies of the
certificate of incorporate and by-laws of Parent certified on behalf of Parent
by its corporate secretary; (iv) a certificate of good standing for Parent dated
no earlier than ten days prior to the Closing Date and (v) incumbency
certificates dated as of the Closing Date executed on behalf of Parent by its
corporate secretary certifying the signature and office of each officer
executing this Agreement, the Company Stockholder Voting Agreement or any other
agreement, certificate or other instrument executed pursuant hereto.
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SECTION 9.3. CONDITIONS TO PARENT'S AND MERGER SUB'S OBLIGATION TO EFFECT
THE MERGER. The obligations of Parent and Merger Sub to effect the Merger shall
be subject to the satisfaction at or prior to the Closing Date of the following
additional conditions:
(a) PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND WARRANTIES. (i) The
Company shall have performed in all material respects each of its agreements
contained in this Agreement required to be performed on or prior to the
Effective Time, (ii) each of the representations and warranties of the Company
contained in this Agreement that is qualified by materiality shall be true and
correct on and as of the Closing Date as if made on and as of such date (other
than to the extent that any such representation and warranty, by its terms, is
expressly limited to a specific date, in which case such representation and
warranty shall be true and correct as of such date) and (iii) each of the
representations and warranties that is not so qualified shall be true in all
material respects on and as of the Closing Date as if made on and as of such
date (other than to the extent that any such representation and warranty is, by
its terms, expressly limited to a specific date, in which case such
representation and warranty shall be true and correct in all material respects
as of such date), in each case, except as contemplated or permitted by this
Agreement.
(b) OFFICER'S CERTIFICATE. The Company shall have furnished to Parent a
certificate, dated the Closing Date, signed by an executive officer of the
Company, certifying to the effect that the conditions set forth in
SECTION 9.3(A) have been satisfied in full.
(c) TAX OPINION. Parent shall have received an opinion of Sidley & Austin,
in form and substance reasonably satisfactory to Parent, on the basis of certain
facts, representations and assumptions set forth in such opinion, dated the
Effective Time, to the effect that the Merger will be treated for federal income
tax purposes as a 368 Reorganization and that each of Parent, Merger Sub and the
Company will be a party to the reorganization within the meaning of Section 368
of the Code. In rendering such opinion, such counsel shall receive and be
entitled to rely upon certain documentation including representations contained
in the Parent Tax Certificate, the Company Tax Certificate, the Shareholder Tax
Certificate and other appropriate certificates of Parent, the Company and other
Persons.
(d) AMENDED AND RESTATED PEPSICO SHAREHOLDER AGREEMENT; AMENDED BY-LAWS;
POHLAD COMPANIES SHAREHOLDER AGREEMENT. Parent and PepsiCo shall have entered
into the Amended and Restated PepsiCo Shareholder Agreement; the amendment to
Parent's by-laws shall have been adopted substantially in the form of
EXHIBIT E; and Parent and Pohlad Companies (and its Affiliates) shall have
entered into the Pohlad Companies Shareholder Agreement.
(e) REDEMPTION OF SERIES AA PREFERRED STOCK. No shares of Series AA
Preferred Stock of Delta Beverage Group, Inc. shall be issued or outstanding.
(f) SECRETARIES' CERTIFICATES. The Company shall have furnished to Parent
(i) copies of the text of the resolutions by which the corporate action on the
part of the Company necessary to approve this Agreement, the Parent Stockholder
Voting Agreement and the transactions contemplated hereby and thereby were
taken; (ii) certificates dated as of the Closing Date executed on behalf of the
Company by its corporate secretary certifying to Parent that such copies are
true, correct and complete copies of such resolutions and that such resolutions
were duly adopted and have not been amended or rescinded; (iii) copies of the
Company Charter and by-laws of the Company certified on behalf of the Company by
its corporate secretary; (iv) a certificate of good standing for the Company
dated no earlier than ten days prior to the Closing Date and (v) incumbency
certificates dated as of the Closing Date executed on behalf of the Company by
its corporate secretary certifying the signature and office of each officer
executing this Agreement, the Parent Stockholder Voting Agreement or any other
agreement, certificate or other instrument executed pursuant hereto.
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ARTICLE X
TERMINATION
SECTION 10.1. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the Company Stockholder
Approval or the Parent Stockholder Approval:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if any Governmental Entity of competent jurisdiction shall have
issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the
consummation of the Merger and such order, decree or ruling or other
action shall have become final and nonappealable;
(ii) (A) if, at the Company Stockholders' Meeting (including any
adjournment thereof), the Company Stockholder Approval shall not
have been obtained or (B) if, at the Parent Stockholders' Meeting
(including any adjournment thereof), the Parent Stockholder
Approval shall not have been obtained; or
(iii) if the Merger shall not have been consummated by February 28, 2001,
unless the failure to consummate the Merger is the result of a
material breach of this Agreement by the party seeking to terminate
this Agreement;
(c) by Parent, if the Company shall have (i) failed to perform in any material
respect any material obligation or to comply in any material respect with
any material agreement or covenant of the Company to be performed or
complied with by it under this Agreement or (ii) breached in any material
respect any of its representations or warranties contained in this
Agreement, which failure or breach described in such clause (i) or
(ii) cannot be cured, such that the condition set forth in SECTION 9.3(A)
cannot be satisfied on or prior to February 28, 2001;
(d) by the Company, if Merger Sub or Parent shall have (i) failed to perform in
any material respect any material obligation or to comply in any material
respect with any material agreement or covenant of Merger Sub or Parent to
be performed or complied with by it under this Agreement or (ii) breached in
any material respect any of their respective representations or warranties
contained in this Agreement, which failure or breach described in such
clause (i) or (ii) cannot be cured, such that the condition set forth in
SECTION 9.2(A) cannot be satisfied on or prior to February 28, 2001;
(e) by Parent, if (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent or
Merger Sub its approval or recommendation of the Merger or this Agreement,
or approved or recommended any Takeover Proposal, (ii) the Company or its
Board of Directors shall have failed to comply with the provisions of
SECTION 7.3 or 8.2(A), or (iii) the Board of Directors of the Company or any
committee thereof shall have resolved to do any of the foregoing; or
(f) by the Company, if (i) the Board of Directors of Parent or any committee
thereof shall have withdrawn or modified in a manner adverse to Company its
approval or recommendation of the Share Issuance, or approved or recommended
any Takeover Proposal, (ii) Parent or its Board of Directors shall have
failed to comply with the provisions of SECTION 7.3 or 8.2(B), or (iii) the
Board of Directors of Parent or any committee thereof shall have resolved to
do any of the foregoing.
SECTION 10.2. EFFECT OF TERMINATION. In the event of a termination of this
Agreement by either the Company or Parent or Merger Sub as provided in
SECTION 10.1, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of Parent, Merger Sub or the Company or
their respective officers or directors, except with respect to the last sentence
of SECTION 8.3,
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SECTION 10.3 and this SECTION 10.2; PROVIDED, HOWEVER, that nothing herein shall
relieve any party of liability for any material breach hereof.
SECTION 10.3. FEES AND EXPENSES. Except as otherwise provided in this
SECTION 10.3, all costs and expenses incurred in connection with the Merger,
this Agreement and the transactions contemplated by this Agreement shall be paid
by the party incurring such fees or expenses, whether or not the Merger is
consummated; PROVIDED, that the Company and Parent shall share equally all fees
and expenses, other than attorneys' and accounting fees and expenses, incurred
in relation to the printing, filing and mailing of the Registration Statement
and the Proxy Statement.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Effective Time or the
termination of this Agreement, except as provided in SECTION 10.2.
SECTION 11.2. NOTICES. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile transmission) and shall
be given,
(i) if to Parent or Merger Sub, to
Whitman Corporation
3501 Algonquin Road
Rolling Meadows, Illinois 60008-3149
Attention: Chairman and Chief Executive Officer
General Counsel
Fax: (847) 818-5047
with a copy to:
Sidley & Austin
Bank One Plaza
10 S. Dearborn Street
Chicago, Illinois 60603
Attention: Richard E. Robbins
Fax: (312) 853-7036
(ii) if to the Company, to
PepsiAmericas, Inc.
3880 Dain Rauscher Plaza
Minneapolis, Minnesota 55402
Attention: Robert C. Pohlad
Fax: (612) 661-3825
with a copy to:
Briggs and Morgan, P.A.
2400 IDS Center
Minneapolis, Minnesota 55402
Attention: Brian D. Wenger
Fax: (612) 334-8650
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or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5:00 p.m. on a business
day, in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next
succeeding business day in the place of receipt.
SECTION 11.3. AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors at
any time before or after obtaining the Company Stockholder Approval or Parent
Stockholder Approval, but after any such approval, no amendment shall be made
which by Law requires further approval by the stockholders of the Company or
Parent, as applicable, without obtaining such further approval. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
SECTION 11.4. EXTENSION, WAIVER. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto or (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party. The failure of
any party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights of remedies
provided by law.
SECTION 11.5. INTERPRETATION. When a reference is made in this Agreement to
an Article or a Section, such reference shall be to an Article or a Section of
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation."
SECTION 11.6. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
SECTION 11.7. ENTIRE AGREEMENT, NO THIRD PARTY BENEFICIARIES. This Agreement
(together with the Confidentiality Agreement and the other documents and the
instruments referred to herein) (a) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof, and (b) except as
provided in SECTION 7.6, is not intended to confer upon any Person other than
the parties hereto, the Affiliated Transaction Committee and the Contingent
Payment Record Holders any rights or remedies hereunder.
SECTION 11.8. GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware without regard to the
conflicts of law rules of such State that might result in the application of the
laws of another jurisdiction.
SECTION 11.9. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of Law or otherwise) without the prior written
consent of the other parties, except that Merger Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect Wholly Owned Subsidiary of Parent. Subject
to the preceding sentence, this Agreement will be
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binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
SECTION 11.10. ENFORCEMENT. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in a Delaware state court, this being in
addition to any other remedy to which they are entitled at Law or in equity. In
addition, each of the parties hereto (i) consents to submit such party to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated hereby, (ii) agrees that such party will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, and (iii) agrees that such party will not
bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a Federal court sitting in the State
of Delaware or a Delaware state court.
SECTION 11.11. SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated so
long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any party. Upon such a
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner so that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.
SECTION 11.12. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
<TABLE>
<S> <C> <C>
WHITMAN CORPORATION
By: /s/ STEVEN R. ANDREWS
-----------------------------------------
Name: Steven R. Andrews
Title: Sr. VP
ANCHOR MERGER SUB, INC.
By: /s/ STEVEN R. ANDREWS
-----------------------------------------
Name: Steven R. Andrews
Title: VP
PEPSIAMERICAS, INC.
By: /s/ ROBERT C. POHLAD
-----------------------------------------
Name: Robert C. Pohlad
Title: President
</TABLE>
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ANNEX B
[CREDIT SUISSE FIRST BOSTON LETTERHEAD]
August 18, 2000
Board of Directors
Whitman Corporation
3501 Algonquin Road
Rolling Meadows, IL 600008
Members of the Board:
You have asked us to adivse you with respect to the fairness to Whitman
Corporation ("Parent") from a financial point of view of the Merger
Consideration (as defined below) to be paid by Parent pursuant to the Agreement
and Plan of Merger, dated as of August 18, 2000 (the "Merger Agreement"), among
Parent, Anchor Merger Sub, Inc., a wholly owned subsidiary of Parent ("Merger
Sub"), and PepsiAmericas, Inc. (the "Company"). The Merger Agreement provides
for the merger (the "Merger") of the Company with and into Merger Sub. The
Merger Agreement further provides that each outstanding share of Class A common
stock, par value $0.01 per share ("Company Class A Common Shares"), of the
Company and each outstanding share of Class B common stock, par value $0.01 per
share ("Company Class B Common Shares" and, together with the Company Class A
Common Shares, "Company Common Shares"), of the Company (other than Company
Common Shares held by Dakota Holdings, LLC ("Dakota Holdings") or Pohlad
Companies ("Pohlad")) will be converted into the right to receive, at the
election of the holder thereof, (a) the Cash Consideration (as defined in the
Merger Agreement), or (b) the Stock Consideration (as defined in the Merger
Agreement) or (c) (i) the number of shares of common stock, par value $0.01 per
share, of Parent (together with preferred share purchase rights of
Parent)("Parent Common Shares") equal to the Fixed Earnout Exchange Ratio (as
defined in the Merger Agreement) PLUS (ii) the right to receive certain
contingent payments of additional Parent Common Shares (the consideration
payable per Company Common Share pursuant to this clause (c), together, the
"Contingent Payment Consideration"). Pursuant to the Merger Agreement, each of
Dakota Holdings and Pohlad will receive the Contingent Payment Consideration
with respect to all Company Common Shares owned by each of them and their
respective affiliates. The Merger Agreement furhter provides that the
stockholders of the Company that elect to receive the Contingent Payment
Consideration (the "Contingent Payment Record Holders") will have the option
(the "Option") to purchase, on a pro rata basis, up to an aggregate of
$25 million in value of Parent Common Shares (the "Additional Shares") at a
price per share equal to the average closing price of Parent Common Shares over
the fifteen consecutive trading days immediately prior to the first public
announcement of the Merger. The Merger Agreement also provides that Dakota
Holdings will have the right to purchase any Additional Shares not purchased by
the other Contingent Payment Record Holders upon exercise of their Option. The
aggregate Cash Consideration, Stock Consideration and Contingent Payment
Consideration payable to holders of Company Common Shares pursuant to the Merger
Agreement is referred to herein as the "Merger Consideration".
In arriving at our opinion, we have reviewed certain publicly available business
and financial information relating to the Company and Parent, as well as a draft
dated August 17, 2000 of the Merger Agreement, a draft dated August 17, 2000 of
the Parent Stockholder Voting Agreement, a draft dated August 17, 2000 of the
Company Stockholder Voting Agreement, a draft dated August 17, 2000 of the form
of the Amended and Restated Shareholder Agreement by and between Parent and
Pepsico, Inc. and a draft dated August 17, 2000 of the form of the Pohlad
Shareholder Agreement. We have also reviewed certain other information,
including financial forecasts, provided to or discussed with us by the Company
and Parent, and have met with the managements of the Company and Parent to
discuss the business and prospects of the Company and Parent. We have also
relied upon the views of
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the managements of the Company and Parent concerning the business, operational
and strategic benefits and implications of the Merger, including the synergistic
values and operating cost savings expected to be achieved through the
combination of the operations of the Company and Parent.
We have also considered certain financial and stock market data of the Company,
and we have compared those data with similar data for other publicly held
companies in businesses similar to those of the Company and we have considered
the financial terms of certain other business combinations and other
transactions which have recently been effected. We also considered such other
information, financial studies, analyses and investigations and financial,
economic and market criteria which we deemed relevant.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
its being complete and accurate in all material respects. With respect to the
financial forecasts, we have assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
managements of the Company and Parent as to the future financial performance of
the Company and Parent and as to the cost savings and other potential synergies
(including the amount, timing and achievability thereof) anticipated to result
from the Merger. You also have informed us, and we have assumed, that the Merger
will be treated as a tax-free reorganization of U.S. federal income tax
purposes. We have also assumed that the Merger Agreement will conform in all
material respects to the draft reviewed by us. In addition, we have not been
requested to make, and have not made, an independent evaluation or appraisal of
the assets or liabilities (contingent or otherwise) of the Company or Parent,
nor have we been furnished with any such evaluations or appraisals. Our opinion
is necessarily based upon financial, economic, market and other conditions as
they exist and can be evaluated on the date hereof. Our opinion does not address
the relative values of the Cash Consideration, the Stock Consideration or the
Contingent Payment Consideration, the actual value of Parent Common Shares when
issued to the Company's stockholders pursuant to the Merger (whether in the form
of Stock Consideration or Contingent Payment Consideration) or the prices at
which Parent Common Shares will trade subsequent to the Merger or the exercise
of the Option, or Parent's underlying business decision to effect the Merger.
We have acted as financial advisor to Parent in connection with the Merger and
will receive a fee for our services, a significant portion of which is
contingent upon the consummation of the Merger. In the past, we have performed
certain investment banking services for Parent and have received customary fees
for such services. In the ordinary course of our business, we and our affiliates
may actively trade the debt and equity securities of Parent and the Company for
our and such affiliates' own accounts and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
It is understood that this letter is for the information of the Board of
Directors of Parent in connection with its consideration of the Merger.
Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the Merger Consideration is fair to Parent from a financial point of
view.
<TABLE>
<S> <C> <C>
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
By /s/ JAMES B. HOESLEY
--------------------------------------
James B. Hoesley
Managing Director
</TABLE>
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ANNEX C
[SALOMON SMITH BARNEY LETTERHEAD]
August 18, 2000
The Board of Directors
PepsiAmericas, Inc.
3880 Dain Rauscher Plaza
60 South 6th Street
Minneapolis, Minnesota 55402
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of the common stock of PepsiAmericas, Inc. (the "Company")
of the consideration provided for in the Agreement and Plan of Merger, dated as
of August 18, 2000 (the "Merger Agreement"), by and among the Company, Whitman
Corporation (the "Acquiror") and a wholly owned subsidiary of the Acquiror (the
"Merger Sub"). As more fully described in the Merger Agreement, (i) Merger Sub
will be merged with and into the Company (the "Merger") and (ii) each
outstanding share of the common stock, par value $.01 per share, of the Company
(the "Company Common Stock") will be converted into, at the election of each
Company stockholder (other than Dakota Holdings, L.L.C. ("Dakota")), which holds
69.9% of the outstanding shares of Company Common Stock and which will receive
the Contingent Payments described below plus the right to purchase shares of
Acquiror Common Stock at the Acquiror Reference Price), the right to receive
either (1) the dollar amount determined by multiplying (a) the exchange ratio
equal to $3.80 divided by the average of the per share closing prices of
Acquiror common stock, par value $.01 per share (the "Acquiror Common Stock"),
for the 15 trading days ending five trading days prior to the earlier of the
Company stockholder meeting or the Acquiror stockholder meeting to consider the
Merger (the "Acquiror Reference Price"), subject to adjustment as set forth in
the Merger Agreement (the "Exchange Ratio") by (b) the Acquiror Reference Price
(the "Cash Consideration"), (2) the number of shares of Acquiror Common Stock
equal to the Exchange Ratio (the "Stock Consideration") or (3) (a) the number of
shares of Acquiror Common Stock equal to the Exchange Ratio divided by 0.7368
plus (b) the right to three contingent payments of shares of Acquiror Common
Stock in the future, the amount of such payments to be determined based upon the
adjusted EBITDA of the Company through 2002 as provided in the Merger Agreement
(each such payment not to exceed the number of shares of Acquiror Common Stock
equal to the Exchange Ratio multiplied by 0.1316)(collectively, the "Contingent
Payments"). In addition, stockholders electing to receive the Contingent
Payments may at the same time elect to purchase from the Acquiror at the
Acquiror Reference Price a number of shares of Acquiror Common Stock
representing such stockholder's proportionate share of an aggregate number of
shares of Acquiror Common Stock equal to $25,000,000 divided by the Acquiror
Reference Price (together with the Contingent Payments, the "Contingent
Consideration"). The Exchange Ratio, the Stock Consideration and the Contingent
Consideration are collectively referred to as the "Merger Consideration."
Certain stockholders of the Company representing a majority of the voting
power of the Company are entering into a Voting Agreement with the Acquiror,
dated the date of the Merger Agreement, wherein they will agree to vote their
shares of Company Common Stock in favor of the Merger (the "Company Stockholder
Agreement"). Certain stockholders of the Acquiror are entering into a Voting
Agreement with the Company, dated the date of the Merger Agreement, wherein they
will agree to
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vote their shares of Acquiror Common Stock in favor of approving the issuance of
the shares of Acquiror Common Stock to be issued in the Merger (the "Acquiror
Stockholder Agreement").
In arriving at our opinion, we reviewed a draft of each of the Merger
Agreement, the Company Stockholder Agreement and the Acquiror Stockholder
Agreement, each dated August 14, 2000, and held discussions with certain senior
officers, directors and other representatives and advisors of the Company and
certain senior officers and other representatives and advisors of the Acquiror
concerning the businesses, operations and prospects of the Company and the
Acquiror. We examined certain publicly available business and financial
information relating to the Company and the Acquiror as well as certain
financial forecasts and other information and data for the Company and the
Acquiror which were provided to or otherwise discussed with us by the
managements of the Company and the Acquiror, including information relating to
certain strategic implications and operational benefits anticipated to result
from the Merger. We reviewed the financial terms of the Merger as set forth in
the Merger Agreement in relation to, among other things: current and historical
market prices and trading volumes of the Company Common Stock and the Acquiror
Common Stock; the historical and projected earnings and other operating data of
the Company and the Acquiror; and the capitalization and financial condition of
the Company and the Acquiror. We considered, to the extent publicly available,
the financial terms of certain other similar transactions recently effected
which we considered relevant in evaluating the Merger and analyzed certain
financial, stock market and other publicly available information relating to the
businesses of other companies whose operations we considered relevant in
evaluating those of the Company and the Acquiror. We also evaluated the pro
forma financial impact of the Merger on the Acquiror. In addition to the
foregoing, we conducted such other analyses and examinations and considered such
other information and financial, economic and market criteria as we deemed
appropriate in arriving at our opinion.
In rendering our opinion, we have assumed and relied, without independent
verification, upon the accuracy and completeness of all financial and other
information and data publicly available or furnished to or otherwise reviewed by
or discussed with us. With respect to financial forecasts and other information
and data provided to or otherwise reviewed by or discussed with us, we have been
advised by the managements of the Company and the Acquiror that such forecasts
and other information and data were reasonably prepared on bases reflecting the
best currently available estimates and judgments of the managements of the
Company and the Acquiror as to the future financial performance of the Company
and the Acquiror and the strategic implications and operational benefits
anticipated to result from the Merger. For purposes of determining the amount of
Contingent Consideration, we have also assumed, with your consent, that the
maximum amount of the first two Contingent Payments will be paid to stockholders
electing to receive the Contingent Payments. We have also assumed, with your
consent, that the Merger will be treated by the Company as a tax-free
reorganization for federal income tax purposes. We are not expressing any
opinion as to what the value of the Acquiror Common Stock actually will be when
issued pursuant to the Merger or the price at which the Acquiror Common Stock
will trade subsequent to the Merger. We have not made or been provided with an
independent evaluation or appraisal of the assets or liabilities (contingent or
otherwise) of the Company or the Acquiror nor have we made any physical
inspection of the properties or assets of the Company or the Acquiror.
Representatives of the Company have advised us, and we have assumed, that the
final terms of the Merger Agreement will not vary materially from those set
forth in the draft reviewed by us. We were not requested to, and we did not,
solicit third party indications of interest in the possible acquisition of all
or a part of the Company, nor were we requested to consider, and our opinion
does not address, the relative merits of the Merger as compared to any
alternative business strategies that might exist for the Company or the effect
of any other transaction in which the Company might engage. Our opinion is
necessarily based upon information available to us, and financial, stock market
and other conditions and circumstances existing and disclosed to us, as of the
date hereof.
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Salomon Smith Barney Inc. has acted as financial advisor to the Company in
connection with the proposed Merger and will receive a fee for such services, a
significant portion of which is contingent upon the consummation of the Merger.
We have in the past provided investment banking services to the Acquiror
unrelated to the proposed Merger, for which services we have received
compensation. In the ordinary course of our business, we and our affiliates may
actively trade or hold the securities of the Company and the Acquiror for our
own account or for the account of our customers and, accordingly, may at any
time hold a long or short position in such securities. In addition, we and our
affiliates (including Citigroup Inc. and its affiliates) may maintain
relationships with the Company, the Acquiror and their respective affiliates.
Our advisory services and the opinion expressed herein are provided for the
information of the Board of Directors of the Company in its evaluation of the
proposed Merger, and our opinion is not intended to be and does not constitute a
recommendation to any stockholder as to how such stockholder should vote on any
matters relating to the proposed Merger or as to the choice of consideration
such stockholder should elect pursuant to the Merger Agreement. Our opinion does
not address the relative values of each of the choices of consideration
available in the Merger.
Based upon and subject to the foregoing, our experience as investment
bankers, our work as described above, the assumptions made as to the future
results of operations for the Company and other factors we deemed relevant, we
are of the opinion that, as of the date hereof, the Merger Consideration to be
received by the holders of the Company Common Stock (other than Dakota) in the
Merger is fair, from a financial point of view, to such holders.
Very truly yours,
/s/ Salomon Smith Barney
SALOMON SMITH BARNEY INC.
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ANNEX D
[CHASE SECURITIES LETTERHEAD]
August 18, 2000
Special Committee of the Board of Directors
PepsiAmericas, Inc.
3800 Dain Rauscher Plaza
66 South Sixth Street
Minneapolis, Minnesota 55402
Members of the Special Committee:
You have informed us that PepsiAmericas, Inc., a Delaware corporation
("PepsiAmericas"), Whitman Corporation, a Delaware corporation ("Whitman"), and
Anchor Merger Sub., Inc., a Delaware corporation and a wholly-owned subsidiary
of Whitman ("Merger Sub"), have entered into an Agreement and Plan of Merger
(the "Agreement") which provides, among other things, that PepsiAmericas will be
merged with and into Merger Sub, with Merger Sub surviving the merger (the
"Merger"). Pursuant to the Merger, each share of class A common stock of
PepsiAmericas, par value $.01 per share (the "Class A Common Stock"), and each
share of class B common stock of PepsiAmericas, par value $.01 per share (the
"Class B Common Stock," together with Class A Common Stock, the "PepsiAmericas
Stock"), issued and outstanding immediately prior to the effective time of the
Merger (other than Dissenting Shares (as defined in the Agreement) and any
shares of PepsiAmericas Stock owned by Whitman, Dakota Holdings, LLC ("Dakota
Holdings") and their respective affiliates) will be converted into the right to
receive (x) subject to the proration provisions as set forth in the Agreement,
an amount of cash, equal to the Exchange Ratio (as described below) MULTIPLIED
BY the Whitman Closing Price (as described below) (the "Cash Consideration"),
(y) that number of shares of common stock, par value $.01 per share, (together
with the associated Rights (as defined in the Agreement)) of Whitman ("Whitman
Stock") equal to the Exchange Ratio (the "Stock Consideration"), or (z) a number
of shares of Whitman Stock (together with the associated Rights) equal to the
Exchange Ratio MULTIPLIED BY 0.7368, PLUS the right to receive a contingent
payment in Whitman Stock and the right to purchase Subscription Shares (as
defined in the Agreement) as provided in the Agreement (the "Contingent Payment
Consideration"). For the purposes herein, the "Consideration" shall mean each of
the Cash Consideration, the Stock Consideration or the Contingent Payment
Consideration, as elected by the holders of PepsiAmericas Stock. Under the
Agreement, Dakota Holdings beneficially owning approximately 78% of the voting
power of PepsiAmericas Stock has agreed, among other things, to have all of its
shares of PepsiAmericas Stock converted into the right to receive shares of
Whitman Stock pursuant to the Contingent Payment Consideration provisions
outlined above.
Pursuant to the Agreement, the Exchange Ratio is equal to $3.80 DIVIDED BY
the average per share closing price of the Whitman Stock during the fifteen (15)
consecutive trading days ending five days immediately prior to the earlier of
(i) the stockholders' meeting of PepsiAmericas held to vote upon the approval of
the Agreement, or (ii) the stockholders' meeting of Whitman held to vote upon
the approval of the Agreement (the "Whitman Closing Price"). The Agreement
further provides that if the Whitman Closing Price exceeds 1.10 MULTIPLIED BY
$14.6125 (the "Whitman Reference Price"), then the Exchange Ratio shall be a
number equal to (A) $3.80 DIVIDED BY (B) 1.10 times the Whitman Reference Price;
and if the Whitman Closing Price is less than .90 times the Whitman Reference
Price, then the Exchange Ratio shall be equal to (A) $3.80 DIVIDED BY (B) .90
times the Whitman Reference Price.
You have requested that we render our opinion as to the fairness, from a
financial point of view, to the holders of shares of PepsiAmericas Stock (other
than shares of PepsiAmericas Stock owned by
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Whitman, Dakota Holdings and their respective affiliates) of the Consideration
to be received by such holders in the Merger.
In arriving at the opinion set forth below, we have, among other things:
(a) reviewed the Agreement dated as of August 18, 2000;
(b) reviewed certain publicly available business information that we deemed
relevant relating to PepsiAmericas and Whitman and the respective
industries in which they operate;
(c) reviewed certain internal non-public financial and operating data and
forecasts furnished to us by the managements of PepsiAmericas and Whitman
relating to the respective businesses of PepsiAmericas and Whitman;
(d) discussed, with members of the senior managements of PepsiAmericas and
Whitman, operations of PepsiAmericas and Whitman, historical financial
statements and future prospects, before and after giving effect to the
Merger;
(e) compared the financial and operating performance of PepsiAmericas and
Whitman with publicly available information concerning certain other
companies we deemed comparable to PepsiAmericas and Whitman and reviewed
the relevant historical stock prices of PepsiAmericas Stock and Whitman
Stock and certain publicly traded securities of such other companies;
(f) reviewed the financial terms of certain recent business combinations and
acquisition transactions we deemed reasonably comparable to the Merger
and otherwise relevant to our inquiry; and
(g) made such other analyses and examinations as we have deemed necessary or
appropriate.
We have assumed and relied upon, without assuming any responsibility for
verification, the accuracy and completeness of all of the financial and other
information provided to, discussed with, or reviewed by or for us, or publicly
available, for purposes of this opinion and have further relied upon the
assurance of the managements of PepsiAmericas and Whitman that they are not
aware of any facts that would make such information inaccurate or misleading. We
have neither made nor obtained any independent evaluations or appraisals of the
assets or liabilities of PepsiAmericas or Whitman, nor have we conducted a
physical inspection of the properties or facilities of PepsiAmericas or Whitman.
We have assumed that the financial forecasts provided to or discussed with us by
PepsiAmericas and Whitman have been reasonably determined on bases reflecting
the best currently available estimates and judgments of the managements of
PepsiAmericas and Whitman as to the future financial performance of
PepsiAmericas and Whitman, as the case may be, including giving effect to the
Merger. We have further assumed that, in all material respects, such forecasts
and projections will be realized in the amounts and times indicated thereby. We
express no view as to such forecasts or projection information or the
assumptions on which they were based.
For purposes of rendering our opinion, we have assumed that, in all respects
material to our analysis, the representations and warranties of each party
contained in the Agreement are true and correct, that each party will favor all
of the covenants and agreements required to be performed by it under the
Agreement and that all conditions to the consummation of the Merger will be
satisfied without waiver thereof. We have further assumed that all material
governmental, regulatory or other consents and approvals will be obtained and
that in the course of obtaining any necessary governmental, regulatory or other
consents and approvals, or any amendments, modifications or waivers to any
documents to which PepsiAmericas, Merger Sub or Whitman are a party, as
contemplated by the Agreement, no restrictions will be imposed or amendments,
modifications or waivers made that would have any material adverse effect on the
contemplated benefits of the Merger. We have further assumed that the Merger
will be accounted for using the purchase method, with the stock portion of
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<PAGE>
the transaction qualifying for tax-free treatment under the Internal Revenue
Code. With your consent, we have assumed that the Cash Consideration will not
fall below $3.80 and that the surviving corporation will meet the Adjusted
EBITDA targets as provided in the Agreement.
In connection with the preparation of this opinion, we have not been
authorized by PepsiAmericas or the Special Committee of the Board of Directors
to solicit, nor have we solicited, third-party indications of interest for the
acquisition of all or any part of PepsiAmericas.
Our opinion herein is necessarily based on market, economic and other
conditions as they exist and can be evaluated on the date of this letter. Our
opinion is limited to the fairness, from a financial point of view, to the
holders of PepsiAmericas Stock (other than shares of PepsiAmericas Stock owned
by Whitman, Dakota Holdings and their respective affiliates) of the
Consideration to be received by such holders in the Merger, and we express no
opinion as to the merits of the underlying decision by PepsiAmericas to engage
in the Merger. This opinion does not constitute a recommendation to any holder
of PepsiAmericas Stock as to how such stockholder should vote with respect to
the proposed Merger or any matter related thereto. In addition, we express no
opinion as to the prices at which PepsiAmericas Stock or Whitman Stock will
trade following the announcement or the consummation of the Merger, as the case
may be.
Chase Securities Inc., as part of its financial advisory business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions and valuations for estate, corporate
and other purposes. We have acted as financial advisor to the Special Committee
of the Board of Directors of PepsiAmericas in connection with the Merger and
will receive a fee for our services. In addition, PepsiAmericas has agreed to
indemnify us for certain liabilities arising out of our engagement. The Chase
Manhattan Corporation and its affiliates, including Chase Securities Inc., in
the ordinary course of business, have from time to time, provided commercial and
investment banking services to Whitman and its affiliates, for which we received
usual and customary compensation and in the future may continue to provide such
commercial and investment banking services. In the ordinary course of business,
we or our affiliates may trade in the debt and equity securities of
PepsiAmericas and Whitman for our own accounts and for the accounts of our
customers and, accordingly, may at any time hold a long or short position in
such securities.
Based upon and subject to the foregoing, we are of the opinion that, as of
the date hereof, the Consideration to be received by the holders of
PepsiAmericas Stock (other than shares of PepsiAmericas Stock owned by Whitman,
Dakota Holdings and their respective affiliates) in the Merger is fair, from a
financial point of view, to such holders.
This opinion is solely for the use and benefit of the Special Committee of
the Board of Directors of PepsiAmericas in its evaluation of the Merger and
shall not be used for any other purpose without the prior written consent of
Chase Securities Inc. This opinion shall not be reproduced, disseminated,
quoted, summarized or referred to at any time, in any manner or for any purpose,
nor shall any public references to Chase Securities Inc. be made by
PepsiAmericas, without the prior written consent of Chase Securities Inc.
Very truly yours,
/s/ Chase Securities Inc.
CHASE SECURITIES INC.
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<PAGE>
ANNEX E
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
SEC. 262 APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this section
with respect to such shares, who continuously holds such shares through the
effective date of the merger or consolidation, who has otherwise complied with
subsection (d) of this section and who has neither voted in favor of the merger
or consolidation nor consented thereto in writing pursuant to Section228 of this
title shall be entitled to an appraisal by the Court of Chancery of the fair
value of the stockholder's shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section251 (other than a merger effected pursuant to
Section251(g) of this title), Section252, Section254, Section257, Section258,
Section263 or Section264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no appraisal
rights shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for its
approval the vote of the stockholders of the surviving corporation as
provided in subsection (f) of Section251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required by
the terms of an agreement of merger or consolidation pursuant to
SectionSection 251, 252, 254, 257, 258, 263 and 264 of this title to accept
for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
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d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section253 of this title is not owned by
the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections
(d) and (e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are available
pursuant to subsection (b) or (c) hereof that appraisal rights are available
for any or all of the shares of the constituent corporations, and shall
include in such notice a copy of this section. Each stockholder electing to
demand the appraisal of such stockholder's shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation, a
written demand for appraisal of such stockholder's shares. Such demand will
be sufficient if it reasonably informs the corporation of the identity of
the stockholder and that the stockholder intends thereby to demand the
appraisal of such stockholder's shares. A proxy or vote against the merger
or consolidation shall not constitute such a demand. A stockholder electing
to take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to Section228
or Section253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days thereafter,
shall notify each of the holders of any class or series of stock of such
constituent corporation who are entitled to appraisal rights of the approval
of the merger or consolidation and that appraisal rights are available for
any or all shares of such class or series of stock of such constituent
corporation, and shall include in such notice a copy of this section;
provided that, if the notice is given on or after the effective date of the
merger or consolidation, such notice shall be given by the surviving or
resulting corporation to all such holders of any class or series of stock of
a constituent corporation that are entitled to appraisal rights. Such notice
may, and, if given on or after the effective date of the merger or
consolidation, shall, also notify such stockholders of the effective date of
the merger or consolidation. Any stockholder entitled to appraisal rights
may, within 20 days after the date of mailing of such notice, demand in
writing from the surviving or resulting corporation the appraisal of such
holder's shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such holder's shares. If such
notice did not notify stockholders of the effective date of the merger or
consolidation, either (i) each such constituent corporation shall send a
second notice before the effective date of the merger or consolidation
notifying each of the holders of any class or series of stock of such
constituent
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corporation that are entitled to appraisal rights of the effective date of
the merger or consolidation or (ii) the surviving or resulting corporation
shall send such a second notice to all such holders on or within 10 days
after such effective date; provided, however, that if such second notice is
sent more than 20 days following the sending of the first notice, such
second notice need only be sent to each stockholder who is entitled to
appraisal rights and who has demanded appraisal of such holder's shares in
accordance with this subsection. An affidavit of the secretary or assistant
secretary or of the transfer agent of the corporation that is required to
give either notice that such notice has been given shall, in the absence of
fraud, be prima facia evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be not
more than 10 days prior to the date the notice is given, provided, that if
the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the day
on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in Chancery
in which the petition was filed a duly verified list containing the names and
addresses of all stockholders who have demanded payment for their shares and
with whom agreements as to the value of their shares have not been reached by
the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a
duly verified list. The Register in Chancery, if so ordered by the Court, shall
give notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation and to
the stockholders shown on the list at the addresses therein stated. Such notice
shall also be given by 1 or more publications at least 1 week before the day of
the hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
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(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subjection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the court deems
just.
(l) The Shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
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ANNEX F
WHITMAN CORPORATION
AMENDED AND RESTATED
BY-LAWS
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Beginning with the 2000 annual meeting, annual meetings of
stockholders for the election of directors and for the transaction of such other
business as may come before the meeting shall be held on the first Thursday of
May at 10:30 A.M., at Chicago, Illinois, or on such other date or at such other
time or place, whether within or without the State of Delaware, as shall be
designated by the Board of Directors.
Section 2. At any annual or special meeting of the stockholders, only such
business shall be conducted as shall have been brought before the meeting
(a) by or at the direction of the Board of Directors or (b) by any stockholder
of the Corporation who complies with the notice procedures set forth in this
Section 2. For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary of the Corporation. To be timely, in the case of an annual
meeting, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the Corporation not less than 60 days nor
more than 90 days prior to the meeting; provided, however, that in the event
that less than 70 days' notice or prior public disclosure of the date of the
meeting is given or made to the stockholders, notice by the stockholder to be
timely must be received not later than the close of business on the 10th day
following the day on which such notice of the date of the annual meeting was
mailed or such public disclosure was made. In the case of a special meeting
requested by a stockholder, such stockholder must provide notice in accordance
with the following sentence at the time of such request. A stockholder's notice
to the Secretary shall be set forth as to each matter the stockholder proposes
to bring before the annual or special meeting, as the case may be, (a) a brief
description of the business desired to be brought before such meeting and the
reasons for conducting such business at such meeting, (b) the name and address,
as they appear on the Corporation's books, of the stockholder proposing such
business, (c) the class and number of shares of the Corporation which are
beneficially owned by the stockholder and (d) any material interest of the
stockholder in such business. Notwithstanding anything in these By-Laws to the
contrary, no business shall be conducted at an annual or special meeting except
in accordance with the procedures set forth in this Section 2. The chairman of
any annual or special meeting shall, if the facts warrant, determine and declare
to the meeting that business was not properly brought before the meeting and in
accordance with the provisions of this Section 2, and if he should so determine,
he shall so declare to the meeting and any such business not properly brought
before the meeting shall not be transacted.
Section 3. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by law or by the Certificate of
Incorporation, may be called by the Chairman and shall be called by him or by
the Secretary at the request of (i) a majority of the Board of Directors or
(ii) any stockholder which, individually or together with any other entity in
which such stockholder has a 20% or greater equity or other ownership interest,
owns 20% or more of the issued and outstanding securities of the Corporation
entitled to vote generally in the election of directors of the Corporation,
provided that such request shall state the purpose or purposes of the proposed
meeting and in the case of a request by a stockholder, shall also comply with
the provisions of Section 2 of this Article I. Special meetings may be held at
such time and place and for such purposes as shall be stated in the
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notice issued by the Chairman or the Secretary calling the meeting, provided
that in the case of a special meeting requested by a stockholder, such special
meeting shall take place not later than 70 days from the date of receipt of
proper notice from such stockholder requesting the meeting. In the case of a
special meeting requested by a stockholder, the Board of Directors shall fix a
record date for stockholders entitled to vote at the special meeting, which
record date shall be not later than 10 days from receipt of proper notice from
such stockholder requesting the meeting, subject to compliance with the
applicable regulations of any exchange on which the Corporation's securities are
listed.
Section 4. Nominations of persons for election to the Board of Directors of
the Corporation may be made at a meeting of stockholders (a) by or at the
direction of the Board of Directors or (b) by any stockholder of the Corporation
entitled to vote for the election of directors at the meeting who complies with
the notice procedures set forth in this Section 4. Nominations by stockholders
shall be made pursuant to timely notice in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice shall be delivered to or
mailed and received at the principal executive offices of the Corporation not
less than 60 days nor more than 90 days prior to the meeting; provided, however,
that in the event that less than 70 days' notice or prior public disclosure of
the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the 10th day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. Such stockholder's
notice shall set forth (a) as to each person whom the stockholder proposes to
nominate for election or reelection as a director, all information relating to
such person that is required to be disclosed in solicitations of proxies for the
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (including
such person's written consent to being named in the proxy statement as a nominee
and to serving as a director if elected); and (b) as to the stockholder giving
the notice (i) the name and address, as they appear on the Corporation's books,
of such stockholder and (ii) the class and number of shares of the Corporation
which are beneficially owned by such stockholder. At the request of the Board of
Directors any person nominated by the Board of Directors for election as a
director shall furnish to the Secretary of the Corporation that information
required to be set forth in a stockholder's notice of nomination which pertains
to the nominee. No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth in
these By-Laws. The chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed in this Section 4, and if he should so
determine, he shall so declare to the meeting and the defective nomination shall
be disregarded.
Section 5. Unless waived, written notice of the date, place, and time of the
holding of each annual and special meeting of the stockholders and, in the case
of a special meeting, the purpose or purposes thereof, shall be given personally
or by mail in a postage prepaid envelope to each stockholder entitled to vote at
such meeting, not less than ten nor more than sixty days before the date of such
meeting, and, if mailed, it shall be directed to such stockholder at his address
as it appears on the records of the Corporation.
Section 6. The officer who has charge of the stock ledger of the Corporation
shall prepare and make before every meeting of stockholders a complete list of
the stockholders as of the record date entitled to vote at the meeting, arranged
in alphabetical order, and showing the address of each stockholder and the
number of shares registered in the name of each stockholder. Such list shall be
open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days prior
to the meeting, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
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Section 7. The Board may, in advance of any meeting of stockholders, appoint
one or more inspectors to act at such meeting, or any adjournment thereof. If
the inspectors shall not be so appointed or if any of them shall fail to appear
or act, the chairman of the meeting may, and on the request of any stockholder
entitled to vote thereat shall, appoint inspectors. Each inspector, before
entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector at such meeting with strict
impartiality and according to the best of his ability. The inspectors shall
determine the number of shares outstanding and the voting power of each, the
number of shares represented at the meeting, the existence of a quorum, the
validity and effect of proxies, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in connection with the
right to vote, count and tabulate all votes, ballots or consents, determine the
result, and do such acts as are proper to conduct the election or vote with
fairness to all stockholders. On request of the chairman of the meeting or any
stockholder entitled to vote thereat, the inspectors shall make a report in
writing of any challenge, request or matter determined by them and shall execute
a certificate of any fact found by them. No director or candidate for the office
of director shall act as inspector of an election of directors. Inspectors need
not be stockholders.
Section 8. At each meeting of the stockholders the Chairman or, in his
absence or inability to act, the Chief Executive Officer, or in his absence or
inability to act, the President shall act as chairman of the meeting. The
Secretary or, in his absence or inability to act, the Assistant Secretary or any
person appointed by the chairman of the meeting shall act as secretary of the
meeting and keep the minutes thereof. The order of business at all meetings of
the stockholders shall be as determined by the chairman of the meeting.
Section 9. Except as otherwise provided by law or the Certificate of
Incorporation, at all meetings of the stockholders fifty-one per cent of the
votes of the shares of stock of the Corporation issued and outstanding and
entitled to vote shall be present in person or by proxy to constitute a quorum
for the transaction of any business, provided that (except as aforesaid) when
stockholders are required to vote by class or series, fifty-one per cent of the
votes represented by the issued and outstanding shares of the appropriate class
or series shall be present in person or by proxy. In the absence of a quorum,
the holders of a majority of the votes of the shares of stock present in person
or by proxy and entitled to vote may adjourn the meeting from time to time.
Unless the Board shall fix after the adjournment a new record date for an
adjourned meeting, notice of such adjourned meeting need not be given, except as
hereinafter provided, if the time and place to which the meeting shall be
adjourned were announced at the meeting at which the adjournment is taken. If
the adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting. At the adjourned meeting the Corporation may transact any business
which might have been transacted at the original meeting.
Section 10. Except as otherwise provided by law, the Certificate of
Incorporation, or any certificate filed by the Corporation in the State of
Delaware pursuant to Section 151 (or any successor provisions) of the General
Corporation Law of the State of Delaware, each holder of record of shares of
stock of the Corporation having voting power shall be entitled at each meeting
of the stockholders to one vote for every share of such stock standing in his
name on the record of stockholders of the Corporation on the date fixed by the
Board as the record date for the determination of the stockholders who shall be
entitled to notice of and to vote at such meeting. Each stockholder entitled to
vote at any meeting of stockholders may authorize another person or persons to
act for him by proxy signed by such stockholder or his attorney-in-fact. Any
such proxy shall be delivered to the secretary of such meeting at or prior to
the time designated in the order of business for so delivering such proxies. No
proxy shall be valid after the expiration of three years from the date thereof,
unless otherwise provided in the proxy. A proxy shall be revocable at the
pleasure of the stockholder executing it, except in those cases where an
irrevocable proxy is permitted by law. Except as otherwise provided by law, the
Certificate of
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Incorporation, or these By-Laws, any corporate action to be taken by vote of the
stockholders shall be authorized by the affirmative vote of a majority of the
shares of stock present in person or represented by proxy at the meeting and
entitled to vote on the matter, or when stockholders are required to vote by
class or series by the affirmative vote of a majority of the shares of stock of
the appropriate class or series present in person or represented by proxy at the
meeting and entitled to vote on the matter. Unless required by law or determined
by the chairman of the meeting to be advisable, the vote on any question need
not be by written ballot. On a vote by written ballot, each ballot shall be
signed by the stockholder voting, or by his proxy, and shall state the number of
shares voted.
ARTICLE II
BOARD OF DIRECTORS
Section 1. The business and affairs of the Corporation shall be managed by
the Board of Directors. The Board may exercise all such authority and powers of
the Corporation and do all such lawful acts and things as are not by law or the
Certificate of Incorporation directed or required to be exercised or done by the
stockholders.
Section 2. The number of directors of the Corporation shall be such number
of persons, not less than three (3), as shall from time to time be fixed by
resolution of two-thirds of the whole Board. Directors need not be stockholders.
Except as otherwise provided by law, the Certificate of Incorporation, or these
By-Laws, the directors shall be elected at the annual meeting of the
stockholders, and the persons receiving a plurality of the votes cast at such
election shall be elected. Directors shall hold office until their respective
successors shall have been duly elected and qualified, or until death,
resignation, or removal, as hereinafter provided in these By-Laws, or as
otherwise provided by law or the Certificate of Incorporation. The Board shall
elect one of its members as Chairman.
Section 3. The Chairman, if present, shall preside at all meetings of the
Board. He shall serve as Chairman of the Executive Committee of the Board and be
a member of such other committees of the Board as shall be determined by the
Board at the time of the creation or the election of the members of any such
committees.
Section 4. The Chairman shall have the powers and duties usually and
customarily associated with the position of a non-executive Chairman. The
Chairman shall have such other powers and duties as may be assigned to him by
the Board. In his capacity as Chairman, he shall not necessarily be an officer
of the Corporation but he shall be eligible to serve, in addition, as an officer
pursuant to Article IV of these By-Laws.
Section 5. Meetings of the Board may be held at such place, either within or
without the State of Delaware, as the Board may from time to time determine or
as shall be specified in the notice or waiver of notice of such meeting.
Section 6. Regular meetings of the Board may be held without notice at such
time and place as the Board may from time to time determine.
Section 7. Special meetings of the Board may be called by two or more
directors of the Corporation or by the Chairman or the Secretary.
Section 8. Notice of each special meeting of the Board shall be given by the
Secretary as hereinafter provided in this Section, in which notice shall be
stated the time and place of the meeting. Notice of each such meeting shall be
delivered to each director either personally or by telephone, telegraph, cable,
or similar means, at least twenty-four hours before the time at which such
meeting is to be held or mailed by first-class mail, postage prepaid, addressed
to the director at his residence or usual place of business, at least three days
before the day on which such meeting is to be held. Notice
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of any such meeting need not be given to any director who shall, either before
or after the meeting, submit a signed waiver of notice or who shall attend such
meeting without protesting, prior to or at its commencement, the lack of notice
to such director. Except as otherwise specifically required by these By-Laws, a
notice or waiver of notice of any regular or special meeting need not state the
purpose of such meeting.
Section 9. Subject to Section 14 of this Article, one-third of the entire
Board shall be present in person at any meeting of the Board in order to
constitute a quorum for the transaction of business at such meeting, and, except
as otherwise expressly required by law, the Certificate of Incorporation or
these By-Laws, the act of a majority of the directors present at any meeting at
which a quorum is present shall be the act of the Board. In the absence of a
quorum at any meeting of the Board, a majority of the directors present thereat
may adjourn such meeting to another time and place, or such meeting need not be
held. At any adjourned meeting at which a quorum is present, any business may be
transacted which might have been transacted at the meeting as originally called.
Except as otherwise provided in this Article II, the directors shall act only as
a Board and the individual directors shall have no power as such.
Section 10. Any director of the Corporation may resign at any time by giving
a written notice of resignation to the Board, the Chairman or the Secretary. Any
such resignation shall take effect at the time specified therein or, if the time
when it shall become effective shall not be specified therein, immediately upon
its receipt; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 11. Vacancies or newly created directorships resulting from an
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, and the directors so
chosen shall hold office until their successors are duly elected and shall
qualify. If, at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the whole Board (as constituted immediately prior to any such increase), the
Court of Chancery may, upon application of any stockholder or holder or holders
of at least ten percent of the votes of the shares at the time outstanding
having the right to vote for such directors, summarily order an election to be
held to fill any such vacancies or newly created directorships, or to replace
the directors chosen by the directors then in office. Except as otherwise
provided in these By-Laws, when one or more directors shall resign from the
Board, effective at a future date, a majority of the directors then in office,
including those who have so resigned, shall have power to fill such vacancy or
vacancies, the vote thereon to take effect when such resignation or resignations
shall become effective, and each director so chosen shall hold office as
provided in this Section 11 in the filling of other vacancies.
Section 12. Except as otherwise provided in the Certificate of Incorporation
or these By-Laws, any director may be removed, either with or without cause, at
any time, by the affirmative vote of a majority of the votes of the issued and
outstanding stock entitled to vote for the election of directors of the
Corporation given at a special meeting of the stockholders called and held for
such purpose; and the vacancy in the Board caused by any such removal may be
filled by such stockholders at such meeting, or, if the stockholders shall fail
to fill such vacancy, as in these By-Laws provided.
Section 13. The Board shall have authority to fix the compensation,
including fees and reimbursement of expenses, of directors for services to the
Corporation in any capacity, provided that no such payment shall preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor.
Section 14. Any action required or permitted to be taken at any meeting of
the Board or of any committee thereof may be taken without a meeting if all
members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee. Members of the Board or of any committee designated
by the
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Board may participate in a meeting of such Board or committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other and participation in a
meeting pursuant to this procedure shall constitute presence in person at such
meeting.
Section 15. The issuance of preferred stock by the Corporation shall require
the approval of two-thirds of the whole Board.
ARTICLE III
COMMITTEES OF THE BOARD
Section 1. The Board of Directors may, by resolution adopted by two-thirds
of the whole Board, designate an Executive Committee to exercise, subject to
applicable provisions of law, all the powers of the Board in the management of
the business and affairs of the Corporation when the Board is not in session,
including without limitation the power to declare dividends and to authorize the
issuance of the Corporation's capital stock, and may, by resolution similarly
adopted, designate one or more other committees. The Executive Committee and
each such other committee shall consist of two or more directors of the
Corporation. The Board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. Any such committee, other than the Executive Committee
whose powers are expressly provided for herein, may to the extent permitted by
law exercise such powers and shall have such responsibilities as shall be
specified in the designating resolution. In the absence or disqualification of
any member of such committee or committees, the member or members thereof
present at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another member of the Board to
act at the meeting in the place of any such absent or disqualified member. Each
committee shall keep written minutes of its proceedings and shall report such
proceedings to the Board when required.
Section 2. (a) The Board of Directors shall designate an Affiliated
Transaction Committee. The Affiliated Transaction Committee shall review,
consider and pass upon any Affiliated Transaction, and no such transaction shall
be effected without the concurrence of the Affiliated Transaction Committee. The
Affiliated Transaction Committee shall have the powers to (i) negotiate with the
representatives of any party to an Affiliated Transaction; (ii) require approval
of an Affiliated Transaction by a vote of the stockholders of the Corporation
which may be greater than or in addition to any vote required by law; and
(iii) engage Independent Advisers at the reasonable expense of the Corporation,
and without prior approval of the Corporation, to assist in its review and
decision regarding any Affiliated Transaction.
(b) The Affiliated Transaction Committee shall consist of at least three
Independent Directors, with each other Independent Director being an alternate
member if any committee member is unable or unwilling to serve. Notwithstanding
the foregoing, until the Corporation's obligation to make Contingent Payments
for all Measurement Periods (each as defined in the Agreement and Plan of Merger
among the Corporation, Anchor Merger Sub, Inc. and PepsiAmericas, Inc. dated as
of August 18, 2000 (the "Merger Agreement")) shall have been finally determined
in accordance with the terms of the Merger Agreement, none of the following
people shall be eligible to serve as a member of the Affiliated Transaction
Committee: (i) Robert Pohlad, (ii) any person who is then or has within the
previous two years been, an affiliate of Robert Pohlad (including any member of
Robert Pohlad's family), it being understood that no person shall be deemed an
affiliate of Robert Pohlad solely by virtue of the fact that such person is then
serving as a director of the Corporation, (iii) any person who is then, or has
within the previous two years been, an affiliate of the Pohlad Companies, a
Minnesota corporation ("Pohlad Companies") or who is then, or has within the
previous two years been, a director, officer, employee, consultant or advisor
(financial, legal or other) of Pohlad Companies or (iv) any person who has,
within the two years immediately prior to the consummation of the
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transactions contemplated by the Merger Agreement, been an affiliate of
PepsiAmericas, Inc. or who has, within the two years immediately prior to the
consummation of the transactions contemplated by the Merger Agreement been, a
director, officer, employee, consultant or advisor (financial, legal or other)
of PepsiAmericas, Inc.
(c) The Affiliated Transaction Committee shall cease to exist on the later
of (i) May 20, 2009 or (ii) the date on which any Affiliated Transaction being
reviewed, considered and passed upon by the Affiliated Transaction Committee
prior to May 20, 2009 shall have been either consummated or abandoned.
(d) For the purposes of the foregoing Article III, Section 2, the following
definitions shall apply:
(i) "Corporation" means the Corporation or any company in which the
Corporation has more than 50% of the voting power in the election of
directors or in which it has the power to elect a majority of the Board of
Directors.
(ii) "PepsiCo, Inc." means PepsiCo, Inc. or any company in which
PepsiCo, Inc. has more than 50% of the voting power in the election of
directors or in which it has the power to elect a majority of the Board of
Directors.
(iii) "Affiliate" means any entity (other than the Corporation) in which
PepsiCo, Inc. has a 20% or greater equity or other ownership interest, or
any entity controlled directly or indirectly by such Affiliate.
Notwithstanding the above, no entity shall be an Affiliate solely by virtue
of the rights granted to PepsiCo, Inc. pursuant to a bottling contract.
(iv) "Affiliated Transaction" means any proposed merger or consolidation
with, purchase of an equity interest in, or purchase of assets other than in
the ordinary course of business from an Affiliate, and which transaction has
an aggregate value exceeding $10 million; provided, however, that any such
merger, consolidation, or purchase which constitutes a "Permitted
Acquisition" under the Amended and Restated Shareholder Agreement between
the Corporation and PepsiCo, Inc., dated as of , 2000 (as it may be
amended from time to time, the "Shareholders Agreement"), shall not
constitute an Affiliated Transaction for purposes of this Article III,
Section 2.
(v) "Independent Directors" means any member of the Corporation's Board
of Directors who (i) is not, and for the past two years has not been, an
officer, director or employee of PepsiCo, Inc. or (other than serving as a
director of the Corporation) an Affiliate; (ii) does not own in excess of 1%
of the shares of PepsiCo, Inc.; and (iii) own any equity or other ownership
interest in an entity (except as permitted by the preceding (ii) and other
than in the Corporation) which is a party to the Affiliated Transaction.
(vi) "Independent Adviser" means any legal or financial adviser or other
expert (i) that has not represented or provided services to PepsiCo, Inc.
during the past calendar year, or (ii) notwithstanding (i) above, that the
Affiliated Transaction Committee (as defined below) determines, after due
inquiry, is able to represent it in an independent manner not adverse to the
interests of the Corporation and its stockholders.
Section 3. A majority of any committee may determine its action and fix the
time and place of its meetings, unless the Board shall otherwise provide. Notice
of such meetings shall be given to each member of the committee in the manner
provided for in Article II, Section 7. The Board shall have power at any time to
fill vacancies in, to change the membership of, or to dissolve any such
committee. Nothing herein shall be deemed to prevent the Board from appointing
one or more committees consisting in whole or in part of persons who are not
directors of the Corporation; provided, however, that no such committee shall
have or may exercise any authority of the Board.
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ARTICLE IV
OFFICERS
Section 1. The officers of the Corporation shall consist of the Chief
Executive Officer, the President, one or more Vice Presidents, the Treasurer,
the Controller and the Secretary. Any two or more offices may be held by the
same person. Each such officer shall be elected from time to time by the Board
of Directors to hold office until his successor shall have been duly elected and
shall have qualified, or until his death, or until he shall have resigned, or
have been removed, as hereinafter provided in these By-Laws. The Board may from
time to time elect, or the Chief Executive Officer may appoint, such other
officers (including one or more Assistant Vice Presidents, Assistant
Secretaries, Assistant Treasurers, and Assistant Controllers) and such agents,
as may be necessary or desirable for the conduct of the business of the
Corporation. Such other officers and agents shall have such duties and shall
hold their offices for such terms as shall be provided in these By-Laws or as
may be prescribed by the Board or by the Chief Executive Officer.
Section 2. Any officer or agent of the Corporation may resign at any time by
giving written notice of his resignation to the Board, the Chief Executive
Officer, or the Secretary. Any such resignation shall take effect at the time
specified therein or, if the time when it shall become effective shall not be
specified therein, immediately upon its receipt; and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
Section 3. Any officer or agent of the Corporation may be removed, either
with or without cause, at any time, by the vote of a majority of the whole Board
at any meeting of the Board, or, except in the case of an officer or agent
elected by the Board, by the Chief Executive Officer. Such removal shall be
without prejudice to the contractual rights, if any, of the person so removed.
Section 4. A vacancy in any office, whether arising from death, resignation,
removal or any other cause, may be filled for the unexpired portion of the term
of the office which shall be vacant in the manner prescribed in these By-Laws
for the regular election or appointment of such office.
Section 5. The Chief Executive Officer shall have the primary responsibility
for and the general control and management of all of the business and affairs of
the Corporation, under the direction of the Board. He shall have power to select
and appoint all necessary officers and employees of the Corporation except such
officers as under these By-Laws are to be elected by the Board, to remove all
appointed officers or employees whenever he shall deem it necessary, and to make
new appointments to fill the vacancies. He shall have the power of suspension
from office for cause of any elected officer, which shall be forthwith declared
in writing to the Board. Whenever in his opinion it may be necessary, he shall
define the duties of any officer or employee of the Corporation which are not
prescribed in the By-Laws or by resolution of the Board. He shall have such
other authority and shall perform such other duties as may be assigned to him by
the Board. In the absence of the Chairman, the Chief Executive Officer shall
preside at meetings of the stockholders and of the directors.
Section 6. The President shall be the chief operating officer of the
Corporation and shall have such authority and perform such duties relative to
the business and affairs of the Corporation as may be delegated to him by the
Board or the Chief Executive Officer. In the absence of both the Chairman and
the Chief Executive Officer, the President shall preside at meetings of the
stockholders and of the directors.
Section 7. Each Vice President and each Assistant Vice President shall have
such powers and perform all such duties as from time to time may be assigned to
him by the Board, the Chief Executive Officer, the President or the senior
officer to whom he reports.
Section 8. The Treasurer shall exercise general supervision over the
receipt, custody and disbursement of corporate funds. He shall have such further
powers and duties and shall be subject to
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such directions as may be granted or imposed upon him from time to time by the
Board or the Chief Executive Officer.
Section 9. The Controller shall be the chief accounting officer of the
Corporation and shall maintain adequate records of all assets, liabilities and
transactions of the Corporation; he shall establish and maintain internal
accounting controls and, in cooperation with the independent public accountants
selected by the Board, shall supervise internal auditing. He shall have such
further powers and duties as may be conferred upon him from time to time by the
Board or the Chief Executive Officer.
Section 10. The Secretary shall keep or cause to be kept in one or more
books provided for that purpose, the minutes of all meetings of the Board, the
committees of the Board and the stockholders; he shall see that all notices are
duly given in accordance with the provisions of these By-Laws and as required by
law; he shall be custodian of the records and the seal of the Corporation and
affix and attest the seal to all stock certificates of the Corporation (unless
the seal of the Corporation on such certificates shall be a facsimile, as
hereinafter provided) and affix and attest the seal to all other documents to be
executed on behalf of the Corporation under its seal; he shall see that the
books, reports, statements, certificates and other documents and records
required by law to be kept and filed are properly kept and filed; and in
general, he shall perform all the duties incident to the office of Secretary and
such other duties as from time to time may be assigned to him by the Board or
the Chief Executive Officer.
Section 11. Any Assistant Secretary, Assistant Treasurer, or Assistant
Controller elected or appointed as heretofore provided, shall perform the duties
and exercise the powers of the Secretary, Treasurer and Controller,
respectively, in their absence or inability to act, and shall perform such other
duties and have such other powers as the Board, the Chief Executive Officer, the
Secretary, Treasurer, or Controller (as the case may be), may from time to time
prescribe.
Section 12. If required by the Board, any officer of the Corporation shall
give a bond or other security for the faithful performance of his duties in such
amount and with such surety or sureties as the Board may specify.
Section 13. The compensation of the officers of the Corporation for their
services as such officers shall be fixed from time to time by the Board;
provided, however, that the Board may by resolution delegate to the Chief
Executive Officer the power to fix compensation of non-elected officers and
agents appointed by him. An officer of the Corporation shall not be prevented
from receiving compensation by reason of the fact that he is also a director of
the Corporation, but any such officer who shall also be a director shall not
have any vote in the determination of the amount of compensation paid to him.
ARTICLE V
INDEMNIFICATION AND INSURANCE
Section 1. Each person who was or is made a party or is threatened to be
made a party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she, or a person of whom he or she is the legal
representative, is or was a director or officer of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans maintained
or sponsored by the Corporation, whether the basis of such proceeding is alleged
action in an official capacity as a director, officer, employee or agent or in
any other capacity while serving as a director, officer, employee or agent,
shall be indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that
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such amendment permits the Corporation to provide broader indemnification rights
than said Law permitted the Corporation to provide prior to such amendment),
against all expense, liability and loss (including attorneys' fees, judgments,
fines, excise taxes pursuant to the Employee Retirement Income Security Act of
1974 or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that, except as provided in
Section 2 of this Article, the Corporation shall indemnify any such person
seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Section shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that, if the Delaware General Corporation Law requires, the payment of
such expenses incurred by a director or officer in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to the Corporation
of an undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director or
officer is not entitled to be indemnified under this Section or otherwise. The
Corporation may, by action of its Board of Directors, provide indemnification to
employees and agents of the Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
Section 2. If a claim under Section 1 of this Article is not paid in full by
the Corporation within thirty days after a written claim has been received by
the Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standard of conduct which makes it permissible under the Delaware
General Corporation Law for the Corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
Section 3. The right to indemnification and the payment of expenses incurred
in defending a proceeding in advance of its final disposition conferred in this
Article shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise. No repeal or modification of this Article shall in any
way diminish or adversely affect the rights of any director, officer, employee
or agent of the Corporation hereunder in respect of any occurrence or matter
arising prior to any such repeal or modification.
Section 4. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the
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Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
ARTICLE VI
CONTRACTS, PROXIES, ETC.
Section 1. Except as otherwise required by law, the Certificate of
Incorporation or these By-laws, any contracts or other instruments may be
executed and delivered in the name and on behalf of the Corporation by such
officer or officers (including any assistant officer) of the Corporation as the
Board of Directors may from time to time direct. Such authority may be general
or confined to specific instances as the Board may determine. The Chief
Executive Officer, the President or any Vice President may execute bonds,
contracts, deeds, leases and other instruments to be made or executed for or on
behalf of the Corporation. Subject to any restrictions imposed by the Board or
the Chief Executive Officer, the President or any Vice President of the
Corporation may delegate contractual power to others under his jurisdiction, it
being understood, however, that any such delegation of power shall not relieve
such officer of responsibility with respect to the exercise of such delegated
power.
Section 2. Unless otherwise provided by resolution adopted by the Board, the
Chief Executive Officer, the President or any Vice President may from time to
time appoint an attorney or attorneys or agent or agents of the Corporation, in
the name and on behalf of the Corporation, to cast the votes which the
Corporation may be entitled to cast as the holder of stock or other securities
in any other corporation, any of whose stock or other securities may be held by
the Corporation, at meetings of the holders of the stock or other securities of
such other corporation, or to consent in writing, in the name of the Corporation
as such holder, to any action by such other corporation, and may instruct the
person or persons so appointed as to the manner of casting such votes or giving
such consent, and may execute or cause to be executed in the name and on behalf
of the Corporation and under its corporate seal or otherwise, all such written
proxies or other instruments as he may deem necessary or proper in the premises.
ARTICLE VII
SHARES, BOOKS, ETC.
Section 1. Every holder of stock in the Corporation shall be entitled to
have a certificate signed by or in the name of the Corporation by the Chief
Executive Officer, the President or a Vice President, and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary, certifying the
number of shares owned by such holder in the Corporation. Any of or all the
signatures on the certificate may be facsimile. In case any officer, transfer
agent, or registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent, or
registrar before such certificate is issued, it may be issued by the Corporation
with the same effect as if such person were such officer, transfer agent, or
registrar at the date of issue.
Section 2. The books and records of the Corporation may be kept at such
places within or without the State of Delaware, as the Board of Directors may
from time to time determine.
Section 3. Transfers of shares of stock of the Corporation shall be made on
the stock records of the Corporation only upon authorization by the registered
holder thereof, or by his attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary or with a transfer agent, and or
surrender of the certificate or certificates for such shares properly endorsed
or accompanied by a duly executed stock transfer power and the payment of all
taxes thereon. Except as otherwise provided by law, the Corporation shall be
entitled to recognize the exclusive right of a person in whose name any share or
shares stand on the record of stockholders as the owner of such share or shares
for all purposes, including, without limitation, the right to receive dividends
or other distributions, and to
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vote as such owner, and the Corporation may hold any such stockholder of record
liable for calls and assessments and shall not be bound to recognize any
equitable or legal claim to or interest in any such share or shares on the part
of any other person whether or not it shall have express or other notice
thereof.
Section 4. The Board may make such additional rules and regulations, not
inconsistent with these By-Laws, as it may deem expedient concerning the issue,
transfer and registration of certificates for shares of stock of the
Corporation. It may appoint or authorize any officer or officers to appoint, one
or more transfer agents or one or more registrars and may require all
certificates for shares of stock to bear the signature or signatures of any of
them.
Section 5. Upon notice to the Corporation by the holder of any certificate
representing shares of stock of the Corporation of any loss, theft, destruction
or mutilation of such certificate, the Corporation may issue a new certificate
of stock in the place of any certificate theretofore issued by it which the
holder thereof shall allege to have been lost, stolen, or destroyed or which
shall have been mutilated, and the Board may, in its discretion, require such
holder or his legal representatives to give to the Corporation a bond in such
sum, limited or unlimited, and in such form and with such surety or sureties as
the Board in its absolute discretion shall determine, and to indemnify the
Corporation against any claim which may be made against it on account of the
alleged loss, theft, or destruction of any such certificate, or of the issuance
of a new certificate. Anything herein to the contrary notwithstanding, the
Board, in its absolute discretion, may refuse to issue any such new certificate,
except pursuant to legal proceedings under the laws of the State of Delaware.
ARTICLE VIII
FISCAL YEAR
The fiscal year of the Corporation shall be determined by the Board of
Directors.
ARTICLE IX
SEAL
The Corporate seal shall have inscribed thereon the name of the Corporation,
the year of its organization and the words "Corporate Seal, Delaware". The seal
may be used by causing it, or a facsimile thereof, to be impressed or affixed or
reproduced or otherwise.
ARTICLE X
AMENDMENTS
These By-Laws may be amended or repealed, or new By-Laws may be adopted, by
two-thirds of the whole Board of Directors at any meeting thereof; provided that
By-Laws adopted by the Board may be amended or repealed by the stockholders.
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ANNEX G
--------------------------------------------------------------------------------
AMENDED AND RESTATED SHAREHOLDER AGREEMENT
By and Between
WHITMAN CORPORATION,
A DELAWARE CORPORATION,
and
PEPSICO, INC.,
A NORTH CAROLINA CORPORATION
Dated as of [ ], 2000
--------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<C> <S> <C>
ARTICLE I
CERTAIN DEFINITIONS
Section 1 .1. Certain Definitions......................................... 1
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2 .1. Representations and Warranties of the Company............... 5
Section 2 .2. Representations and Warranties of the Shareholder........... 5
ARTICLE III
SHAREHOLDER AND COMPANY CONDUCT
Section 3 .1. Acquisition of Voting Securities............................ 6
Section 3 .2. Required Reduction of Ownership Percentage.................. 6
Section 3 .3. Top-Up Rights............................................... 8
Section 3 .4. Transfer.................................................... 8
Section 3 .5. Charter and By-Laws......................................... 8
Section 3 .6. Rights Agreement............................................ 8
Section 3 .7. Special Meetings Requested by the Shareholder;
Nominations............................................... 9
Section 3 .8. No Agreements............................................... 9
Section 3 .9. Dakota Holdings............................................. 9
ARTICLE IV
BOARD COMPOSITION
Section 4 .1. Board Composition........................................... 10
ARTICLE V
EFFECTIVENESS AND TERMINATION
Section 5 .1. Effectiveness............................................... 10
Section 5 .2. Termination................................................. 10
Section 5 .3. Agreements Following Certain Acquisitions................... 10
ARTICLE VI
MISCELLANEOUS
Section 6 .1. Injunctive Relief........................................... 11
Section 6 .2. Successors and Assigns...................................... 11
Section 6 .3. Amendments; Waiver.......................................... 11
Section 6 .4. Notices..................................................... 11
Section 6 .5. Applicable Law.............................................. 12
Section 6 .6. Headings.................................................... 12
Section 6 .7. Integration................................................. 12
Section 6 .8. Severability................................................ 12
Section 6 .9. Consent to Jurisdiction..................................... 12
Section 6 .10. Counterparts................................................ 13
</TABLE>
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AMENDED AND RESTATED SHAREHOLDER AGREEMENT, dated as of [ ], 2000 (this
"AGREEMENT"), by and between Whitman Corporation, a Delaware corporation (the
"COMPANY"), and PepsiCo, Inc., a North Carolina corporation (the "SHAREHOLDER").
W I T N E S S E T H:
WHEREAS, the Company and the Shareholder are parties to a Shareholder
Agreement, dated as of May 20, 1999 (the "ORIGINAL SHAREHOLDER AGREEMENT");
WHEREAS, the Company, Anchor Merger Sub, Inc., a Delaware corporation
("MERGER SUB"), and PepsiAmericas, Inc., a Delaware corporation ("PAS"), have
entered into an Agreement and Plan of Merger, dated as of August 18, 2000 (the
"MERGER AGREEMENT"), pursuant to which, among other things, PAS will be merged
with and into Merger Sub, with Merger Sub as the surviving corporation, and in
connection therewith, certain outstanding shares of common stock of PAS will be
converted into shares of common stock, par value $0.01 per share (the "COMMON
STOCK"), of the Company (the "MERGER");
WHEREAS, the execution of this Agreement upon the consummation of the Merger
(the "CLOSING") is a covenant of the Company in the Merger Agreement and a
condition to the Company's obligations to close the transactions contemplated by
the Merger Agreement;
WHEREAS, the Shareholder has entered into a voting agreement, dated as of
August 18, 2000, pursuant to which the Shareholder has agreed to vote in favor
of the Merger and the other transactions contemplated by the Merger Agreement;
and
WHEREAS, in light of the transactions contemplated by the Merger Agreement,
the Company and the Shareholder desire to amend and restate in this Agreement
certain terms and conditions concerning the acquisition and disposition of
Voting Securities (as defined herein) of the Company by the Shareholder, and
related provisions concerning the Shareholder's relationship with and investment
in the Company immediately following the Closing.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. CERTAIN DEFINITIONS. In addition to other terms defined
elsewhere in this Agreement, as used in this Agreement, the following terms
shall have the meanings ascribed to them below:
"AFFILIATE" shall mean, with respect to any person, any other person that
directly or indirectly through one or more intermediaries controls or is
controlled by or is under common control with such person. For the purposes of
this definition, "control," when used with respect to any particular person,
means the power to direct the management and policies of such person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"AFFILIATED TRANSACTION COMMITTEE" shall mean the Affiliated Transaction
Committee of the Board.
"AGREEMENT" shall have the meaning assigned to such term in the preamble.
"BENEFICIAL OWNER" (and, with correlative meanings, "BENEFICIALLY OWN" and
"BENEFICIAL OWNERSHIP") of any interest means a Person who, together with his or
its Affiliates, is or may be deemed a beneficial owner of such interest for
purposes of Rule 13d-3 or 13d-5 under the Exchange Act, or who, together with
his or its Affiliates, has the right to become such a beneficial owner of such
interest (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement,
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arrangement or understanding, or upon the exercise, conversion or exchange of
any warrant, right or other instrument, or otherwise; PROVIDED that a Person
shall not be deemed the Beneficial Owner of Voting Securities solely as a result
of having been granted a revocable proxy relating to such Voting Securities in
connection with any one special or annual meeting of shareholders of the Company
(including any postponements or adjournments thereof), nor shall the procurement
of such a proxy be deemed to give the proxy holder "control" over any Person as
to which such proxy holder does not otherwise have control; and PROVIDED,
FURTHER, that this definition shall be subject to the last sentence of
Section 3.9.
"BOARD" shall mean the Board of Directors of the Company in office at the
applicable time, as elected in accordance with the By-Laws.
"BUY-BACK EXCESS" shall have the meaning set forth in Section 3.2 of this
Agreement.
"BUY-BACK OFFER" shall have the meaning set forth in Section 3.2 of this
Agreement.
"BY-LAWS" shall mean the by-laws of the Company, as in effect immediately
following consummation of the Merger (including amendments pursuant to the
Merger Agreement), as they may be amended from time to time.
"CHARTER" shall mean the Certificate of Incorporation of the Company, as in
effect immediately following consummation of the Merger, as it may be amended
from time to time.
"CLOSING" shall have the meaning assigned in the third recital of this
Agreement.
"COMBINED MAXIMUM OWNERSHIP PERCENTAGE" shall mean, calculated at a
particular point in time, a Total Ownership Percentage of 49.9%; PROVIDED that
in the event of a Permitted Acquisition (other than a Contingent Payment
Acquisition) which results in the Significant Shareholders' Total Ownership
Percentage exceeding 49.9%, so long as the Significant Shareholders' Total
Ownership Percentage exceeds 49.9% due to such Permitted Acquisition, the
Combined Maximum Ownership Percentage shall become the Significant Shareholders'
Total Ownership Percentage giving effect to such Permitted Acquisition.
"COMMISSION" shall mean the United States Securities and Exchange
Commission.
"COMMON STOCK" shall have the meaning assigned in the first recital of this
Agreement.
"COMPANY" shall have the meaning assigned in the preamble.
"CONTINGENT PAYMENT ACQUISITION" shall mean any acquisition of Voting
Securities pursuant to any Contingent Payment (as defined in the Merger
Agreement).
"DAKOTA HOLDINGS" shall mean Dakota Holdings, LLC, a Delaware limited
liability company.
"DAKOTA HOLDINGS AGREEMENT" shall have the meaning set forth in Section 3.9
of this Agreement.
"DIRECTOR" shall mean any member of the Board of Directors of the Company in
office at the applicable time, as elected in accordance with the provisions of
the By-Laws.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"FAMILY" shall mean, with respect to any natural person, (i) any child,
stepchild, parent, stepparent, spouse or sibling, and (ii) any grandchild,
grandparent, uncle, aunt, first cousin, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law who Beneficially
Owns greater than 1% of the Voting Power or who has entered into an agreement or
commitment with said natural person with respect to the Voting Securities, and
shall in each case include adoptive relationships.
"INDEPENDENT DIRECTOR" shall mean any person who is both (i) independent of
and otherwise unaffiliated with any member of the Shareholder Group or the
Pohlad Group, and who is not a
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director, officer, employee, consultant or advisor (financial, legal or other)
of any member of the Shareholder Group or the Pohlad Group and has not served in
any such capacity in the previous two (2) years and (ii) not an officer or
employee, consultant or advisor (financial, legal or other) of the Company and
has not served in any such capacity in the previous two (2) years.
"MAXIMUM OWNERSHIP PERCENTAGE" shall mean, calculated at a particular point
in time, a Total Ownership Percentage of 49.0%; PROVIDED that in the event of a
Permitted Acquisition (other than a Contingent Payment Acquisition) which
results in the Shareholder Group's Total Ownership Percentage exceeding 49.0%,
so long as the Shareholder Group's Total Ownership Percentage exceeds 49.0% due
to such Permitted Acquisition, the Maximum Ownership Percentage shall become the
Shareholder Group's Total Ownership Percentage giving effect to such Permitted
Acquisition.
"MERGER" shall have the meaning set forth in the second recital of this
Agreement.
"MERGER AGREEMENT" shall have the meaning set forth in the second recital of
this Agreement.
"MINIMUM PRICE" shall mean the highest average of per share closing prices
on the NYSE Composite Tape of the Voting Securities (or, if the Voting
Securities are not quoted on the NYSE Composite Tape, on the principal United
States securities exchange registered under the Exchange Act on which such
Voting Securities are listed, or, if such Voting Securities are not listed on
any such exchange, the closing sale price or bid quotation with respect to such
Voting Securities on the National Association of Securities Dealers, Inc.
Automated Quotations System or any system then in use; PROVIDED, HOWEVER, if no
such quotations are available with respect to such Voting Securities, the price
of such Voting Securities shall be the public market trading value as determined
by an investment banker of nationally recognized reputation selected by the
Independent Directors) over any 20 consecutive trading day period during the
18 month period preceding the date of the first public announcement of a
Shareholder Offer.
"NYSE" shall mean the New York Stock Exchange, Inc.
"PERMITTED ACQUISITION" shall mean the acquisition of Voting Securities
pursuant to (1) a transaction or series of transactions that would not result,
individually or in the aggregate, in any member of the Shareholder Group, singly
or as part of a partnership, limited partnership, syndicate or other 13D Group,
directly or indirectly, acquiring, proposing to acquire, or publicly announcing
or otherwise disclosing an intention to propose to acquire, or offering or
agreeing to acquire, by purchase or otherwise, Beneficial Ownership of any
Security so as to cause either (x) the Shareholder Group's Total Ownership
Percentage to exceed the Maximum Ownership Percentage or (y) the Significant
Shareholders' Total Ownership Percentage to exceed the Combined Maximum
Ownership Percentage, (2) a Shareholder Offer at a price which is not less than
the Minimum Price, (3) a merger or other business combination approved by a
majority of the Voting Power attributable to Voting Securities not Beneficially
Owned by the Shareholder Group, (4) a transaction approved by a majority of the
Independent Directors, or (5) any acquisition of Voting Securities by the Pohlad
Group approved by the Affiliated Transaction Committee (or, if such Committee
shall not be in existence, by a committee of the Board composed entirely of
Independent Directors). For purposes of this definition, the value of any
securities offered in exchange for Voting Securities pursuant to a Shareholder
Offer shall be the average of closing prices on the NYSE Composite Tape of such
securities (or, if such securities are not quoted on the NYSE Composite Tape, on
the principal United States securities exchange registered under the Exchange
Act on which such securities are listed, or, if such securities are not listed
on any such exchange, the closing sale price or bid quotation with respect to
such security on the National Association of Securities Dealers, Inc. Automated
Quotations System or any system then in use; PROVIDED, HOWEVER, if no such
quotations are available with respect to such securities, the price of such
securities shall be the public market trading value as determined by an
investment banker of nationally recognized reputation selected by the
Independent Directors) over the five consecutive trading day period preceding
the date of the first public announcement of such Shareholder Offer.
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"PERMITTED SIGNIFICANT TRANSFEREE" shall have the meaning set forth in
Section 3.4 of this Agreement.
"PERSON" shall mean any individual, partnership, joint venture, corporation,
trust, unincorporated organization, government or department or agency of a
government.
"POHLAD COMPANIES" shall mean Pohlad Companies, a Minnesota corporation.
"POHLAD GROUP" shall mean Robert Pohlad, any Affiliate of Robert Pohlad
(other than the Company or its subsidiaries), any member of Robert Pohlad's
Family, and any Person with whom Robert Pohlad, any Affilate of Robert Pohlad or
any member of Robert Pohlad's Family is part of a 13D Group.
"POHLAD SHAREHOLDER AGREEMENT" shall mean the Shareholder Agreement, dated
as of [ ], 2000, by and between the Company, Dakota Holdings, the Pohlad
Companies and Robert Pohlad.
"REPURCHASE" shall have the meaning set forth in Section 3.2 of this
Agreement.
"RIGHTS AGREEMENT" shall mean the Shareholder Rights Agreement, dated as of
May 20, 1999, as amended.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SHAREHOLDER" shall have the meaning assigned in the preamble.
"SHAREHOLDER AFFILIATE" shall mean any Affiliate of the Shareholder (other
than the Company or its subsidiaries).
"SHAREHOLDER GROUP" shall mean the Shareholder, any Shareholder Affiliate,
any Permitted Significant Transferee and any Person with whom the Shareholder,
any Shareholder Affiliate or any Permitted Significant Transferee is part of a
13D Group in respect of Voting Securities, but shall exclude any member of the
Pohlad Group.
"SHAREHOLDER OFFER" shall mean (i) a tender offer or exchange offer by any
member of the Shareholder Group for all Voting Securities not Beneficially Owned
by the Shareholder Group or (ii) a merger or other business combination pursuant
to which all Voting Securities not Beneficially Owned by the Shareholder Group
are proposed to be exchanged or converted.
"SIGNIFICANT SHAREHOLDERS" shall mean, collectively, the Shareholder Group
and the Pohlad Group.
"SIGNIFICANT TRANSFEREE" shall mean a transferee which would have a Total
Ownership Percentage of greater than 20% after giving effect to any proposed
Transfer.
"13D GROUP" shall mean any group of Persons acquiring, holding, voting or
disposing of any Voting Security which would be required under Section 13(d) of
the Exchange Act and the rules and regulations thereunder to file a statement on
Schedule 13D with the Commission as a "person" within the meaning of
Section 13(d)(3) of the Exchange Act; PROVIDED that a Person shall not be deemed
to be part of a 13D Group with another Person solely as a result of having been
granted a revocable proxy relating to such Person's Voting Securities in
connection with any one special or annual meeting of shareholders of the Company
(including any postponements or adjournments thereof); PROVIDED, FURTHER, that
the members of the Shareholder Group shall not be deemed to be part of a 13D
Group with any member of the Pohlad Group solely due to ownership of interests
in Dakota Holdings so long as all members of the Shareholder Group are in
compliance with the proviso in the first sentence of Section 3.9.
"TOTAL OWNERSHIP PERCENTAGE" shall mean, calculated at a particular point in
time, the Voting Power represented by the Voting Securities Beneficially Owned
by the Person (or Persons) whose Total Ownership Percentage is being determined.
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"TOTAL VOTING POWER" shall mean, calculated at a particular point in time,
the aggregate Votes represented by all then outstanding Voting Securities.
"TRADING DAY", with respect to a Voting Security, shall mean a day on which
the principal national securities exchange on which such Voting Security is
listed or admitted to trading is open for the transaction of business or, if
such security is not listed or admitted to trading on any national securities
exchange, any day other than a Saturday, Sunday or a day on which banking
institutions in the City of New York are authorized or obligated to close.
"TRANSFER" shall mean any sale, transfer, pledge, encumbrance or other
disposition to any Person, and to "TRANSFER" shall mean to sell, transfer,
pledge, encumber or otherwise dispose of to any Person.
"VOTES" shall mean votes entitled to be cast generally in the election of
Directors, assuming the conversion of any securities then convertible into
Common Stock or shares of any other class of capital stock of the Company then
entitled to vote generally in the election of Directors.
"VOTING POWER" shall mean, calculated at a particular point in time, the
ratio, expressed as a percentage, of (a) the Votes represented by the Voting
Securities with respect to which the Voting Power is being determined to
(b) Total Voting Power.
"VOTING SECURITIES" shall mean the Common Stock and shares of any other
class of capital stock of the Company then entitled to vote generally in the
election of Directors and any securities then convertible into Common Stock or
shares of any other class of capital stock of the Company then entitled to vote
generally in the election of Directors.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Shareholder as of the date hereof as follows:
(a) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware and has
all necessary corporate power and authority to enter into this Agreement and
to carry out its obligations hereunder.
(b) This Agreement has been duly and validly authorized by the Company
and all necessary and appropriate action has been taken by the Company to
execute and deliver this Agreement and to perform its obligations hereunder.
(c) This Agreement has been duly executed and delivered by the Company
and assuming due authorization and valid execution and delivery by the
Shareholder, this Agreement is a valid and binding obligation of the
Company, enforceable against it in accordance with its terms.
Section 2.2. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The
Shareholder represents and warrants to the Company as of the date hereof as
follows:
(a) The Shareholder has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of North
Carolina and has all necessary corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder.
(b) This Agreement has been duly and validly authorized by the
Shareholder and all necessary and appropriate action has been taken by the
Shareholder to execute and deliver this Agreement and to perform its
obligations hereunder.
(c) This Agreement has been duly executed and delivered by the
Shareholder and assuming due authorization and valid execution and delivery
by the Company, this Agreement is a valid and binding obligation of the
Shareholder, enforceable against it in accordance with its terms.
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ARTICLE III
SHAREHOLDER AND COMPANY CONDUCT
Section 3.1. ACQUISITION OF VOTING SECURITIES. Subject to the provisions
of this Agreement, during the term of this Agreement, the Shareholder agrees
with the Company that, without the prior approval of a majority of the
Independent Directors, the Shareholder will not, and will cause each member of
the Shareholder Group not to, take any of the following actions:
(a) singly or as part of a partnership, limited partnership, syndicate
or other 13D Group, directly or indirectly, acquire, propose to acquire, or
publicly announce or otherwise disclose an intention to propose to acquire,
or offer or agree to acquire, by purchase or otherwise, Beneficial Ownership
of any Voting Security so as to cause either (x) the Shareholder Group's
Total Ownership Percentage to exceed the Maximum Ownership Percentage or
(y) to the best of the Shareholder's knowledge, the Significant
Shareholders' Total Ownership Percentage to exceed the Combined Maximum
Ownership Percentage, other than pursuant to a Permitted Acquisition;
(b) form, join or in any way participate in a 13D Group with respect to
any Voting Securities of the Company or any securities of its subsidiaries
if such 13D Group's Total Ownership Percentage would exceed the Maximum
Ownership Percentage;
(c) initiate (including by means of proposing or publicly announcing or
otherwise disclosing an intention to propose, solicit, offer, seek to effect
or negotiate) a merger, acquisition or other business combination
transaction relating to the Company (other than a merger, acquisition or
business combination of a third party (not a member of the Shareholder
Group) with the Company) which would not be, if consummated, a Permitted
Acquisition.
The Shareholder Group shall not be prohibited by the terms of this Agreement
from taking any action or exercising any right which is not inconsistent with
the terms of this Agreement, including soliciting or obtaining the revocable
proxy of any other shareholder of the Company with respect to the election of
directors or any other matter, seeking the election of new directors, calling
special meetings of shareholders of the Company, making shareholder proposals,
engaging in discussions with the Board or the management of the Company or
otherwise voting its Voting Securities in any manner in which any member of the
Shareholder Group shall determine in its sole discretion. In addition, this
section shall not be deemed to restrict Directors affiliated with the
Shareholder from participating as Board members in the direction of the Company.
Section 3.2. REQUIRED REDUCTION OF OWNERSHIP PERCENTAGE. (a) If at any
time the Shareholder becomes aware that the Shareholder Group's Total Ownership
Percentage exceeds the Maximum Ownership Percentage, other than as permitted
pursuant to the terms of this Agreement, then the Shareholder shall, or shall
cause the Shareholder Group to, consistent with the provisions of this
Agreement, promptly (in any event, prior to the earliest to occur of (i) the
record date for the next annual or special meeting of shareholders of the
Company, (ii) the record date for the taking of any action of shareholders of
the Company by written consent or (iii) the purchase of any additional Voting
Securities by any member of the Shareholder Group) take all action necessary to
reduce the amount of Voting Securities Beneficially Owned by the Shareholder
Group such that the Shareholder Group's Total Ownership Percentage is not
greater than the Maximum Ownership Percentage.
(b) If at any time the Shareholder becomes aware that the Significant
Shareholders' Total Ownership Percentage exceeds the Combined Maximum Ownership
Percentage as a result of a reduction in the number of Voting Securities
outstanding (including, without limitation, as a result of a purchase of Common
Stock by the Company) (such excess, the "BUY-BACK EXCESS"), then the Shareholder
shall, or shall cause the Shareholder Group to, consistent with the provisions
of this Agreement, promptly (in any event, prior to the earliest to occur of
(x) the record date for the next annual or special meeting of shareholders of
the Company, (y) the record date for the taking of any
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action of shareholders of the Company by written consent or (z) the purchase of
any additional Voting Securities by any member of the Shareholder Group) take
all action necessary to reduce the amount of Voting Securities Beneficially
Owned by the Shareholder Group by the amount of such Buy-Back Excess in the
following manner and order:
(i) First, by Transferring to a Person other than the Significant
Shareholders the amount, if any, of Voting Securities received by the
Shareholder Group as an Aggregate Contingent Payment (as defined in the
Merger Agreement), to the extent not previously Transferred pursuant to this
Section;
(ii) Second, by Transferring to a Person other than the Significant
Shareholders the pro rata amount (based on the relative amounts of Voting
Securities purchased by each of the Shareholder Group and the Pohlad Group
since August [18], 2000) of Voting Securities, if any, purchased by the
Shareholder Group since August [18], 2000;
(iii) Third, by Transferring to a Person other than the Significant
Shareholders the pro rata amount of any remaining Buy-Back Excess (based on
the relative Total Ownership Percentages, after giving effect to (i) and
(ii) above, of the Shareholder Group and the Pohlad Group immediately prior
to the time when the Combined Maximum Ownership Percentage was exceeded);
(iv) Fourth, notwithstanding the foregoing, the maximum number of Voting
Securities that the Shareholder Group shall be required to Transfer pursuant
to (ii) and (iii) above shall not exceed the amount that would be required
to be Transferred if the Pohlad Group made its corresponding pro rata
Transfers consistent with (ii) and (iii) above.
(c) If at any time the Shareholder becomes aware that the Significant
Shareholders' Total Ownership Percentage exceeds the Combined Maximum Ownership
Percentage, other than as a result of a reduction in the total number of Voting
Securities (which situation shall be governed by paragraph (b) above) or as
permitted pursuant to the terms of this Agreement, then the Shareholder shall,
or shall cause the Shareholder Group to, consistent with the provisions of this
Agreement, promptly (in any event, prior to the earliest to occur of (i) the
record date for the next annual or special meeting of shareholders of the
Company, (ii) the record date for the taking of any action of shareholders of
the Company by written consent or (iii) the purchase of any additional Voting
Securities by any member of the Shareholder Group) take all action necessary to
reduce the amount of Voting Securities Beneficially Owned by the Shareholder
Group such that the Significant Shareholders' Total Ownership Percentage is not
greater than the Combined Maximum Ownership Percentage; PROVIDED that if the
Shareholder becomes aware that the Significant Shareholders' Total Ownership
Percentage exceeds the Combined Maximum Ownership Percentage due to an
acquisition by a member of the Pohlad Group of Voting Securities or the addition
to the Pohlad Group of a new Affiliate that Beneficially Owns Voting Securities,
the Shareholder shall promptly inform the Company of such fact but shall not be
required to reduce the amount of Voting Securities Beneficially Owned by the
Shareholder Group due to such event so long as the Shareholder Group is in
compliance with the other provisions of this Agreement.
(d) During the term of this Agreement, if the Company purchases shares of
Common Stock from the public, whether by tender offer, open market purchase or
otherwise (a "REPURCHASE"), the Company shall contemporaneously with the
Repurchase offer to purchase from each of the Significant Shareholders, on the
same terms and conditions, including price, as in the Repurchase, a percentage
of those shares of Common Stock Beneficially Owned by each of the Significant
Shareholders equal to the percentage of shares of Common Stock to be Repurchased
from the Beneficial Owners of shares of Common Stock other than the Significant
Shareholders (the "BUY-BACK OFFER"). The Company shall provide notice to the
Shareholder of its intention to engage in a Repurchase and of the mechanism by
which the Repurchase shall occur not less than thirty (30) days in advance of
the date on which the
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Repurchase is to be consummated, and the Shareholder shall provide notice to the
Company within ten (10) days of receipt of such notice of whether the
Shareholder Group intends to accept the Buy-Back Offer.
Section 3.3. TOP-UP RIGHTS. During the term of this Agreement, if the
Shareholder Group's Total Ownership Percentage is below the Maximum Ownership
Percentage and the Significant Shareholders' Total Ownership Percentage is below
the Combined Maximum Ownership Percentage, the Shareholder Group may at its
option purchase Voting Securities from time to time in the open market or
otherwise in an amount not in excess of the amount that would cause either
(x) the Shareholder Group's Total Ownership Percentage to exceed the Maximum
Ownership Percentage or (y) the Significant Shareholders' Total Ownership
Percentage to exceed the Combined Maximum Ownership Percentage.
Section 3.4. TRANSFER. Except for any requirements of the Securities Act
applicable to such Transfer, each of the members of the Shareholder Group may
Transfer any of the Voting Securities Beneficially Owned by such member of the
Shareholder Group to any transferee which is not a Significant Transferee
without restriction, and may effect such a Transfer to a Significant Transferee
with the prior written consent of a majority of the Independent Directors;
PROVIDED, HOWEVER, that each of such members of the Shareholder Group may
Transfer any of such Voting Securities to any Significant Transferee without
restriction (other than as contemplated in the last sentence of this
Section 3.4) or obtaining such consent if, at the time of such Transfer, the
Shareholder Group Beneficially Owns at least 20% of the outstanding voting
securities of such Significant Transferee and no other Person Beneficially Owns
a greater percentage of the outstanding voting securities of such Significant
Transferee than the percentage owned by the Shareholder Group (a "PERMITTED
SIGNIFICANT TRANSFEREE"). The Shareholder Group shall obtain the prior written
consent of a majority of the Independent Directors to any Transfer by the
Shareholder Group of any voting securities of a Permitted Significant Transferee
if, at the time of such Transfer, such Permitted Significant Transferee has a
Total Ownership Percentage of greater than 20% and such Transfer would result in
(x) the Shareholder Group Beneficially Owning less than 20% of the outstanding
voting securities of such Permitted Significant Transferee or (y) any other
Person Beneficially Owning a greater percentage of the outstanding voting
securities of such Permitted Significant Transferee than the percentage
Beneficially Owned by the Shareholder Group after giving effect to such
Transfer. Notwithstanding the foregoing provisions of this Section 3.4, none of
the restrictions of this Section 3.4 shall apply to (i) a Transfer by any member
of the Shareholder Group of any of the Voting Securities in a public offering
pursuant to which reasonable efforts are made to achieve a wide distribution of
such Voting Securities, (ii) a liquidation of Dakota Holdings or other
distribution of its assets to its members in proportion to their capital
accounts or (iii) a Transfer of Voting Securities among members of the
Shareholder Group, PROVIDED that any such transferee shall agree with the
Company in writing prior to each such Transfer to be bound by the terms of this
Agreement with respect to its Beneficial Ownership of Voting Securities.
Section 3.5. CHARTER AND BY-LAWS. During the term of this Agreement the
Company shall not, and the Shareholder Group shall not, and shall not facilitate
any effort to, amend, alter or repeal, or propose the amendment, alteration or
repeal of, any provision of the Charter or the By-Laws in any manner which is
inconsistent with the terms of this Agreement. If at any time during the term of
this Agreement the provisions of this Agreement shall conflict with the
provisions of the Charter or the By-Laws, the parties shall use all reasonable
efforts, consistent with their fiduciary responsibilities, to cause the
provisions of the Charter and the By-Laws to be brought into conformity with the
provisions of this Agreement.
Section 3.6. RIGHTS AGREEMENT. During the term of this Agreement, the
Company hereby agrees not to (i) amend any provision of the Rights Agreement in
any manner which is inconsistent with the terms of this Agreement or the Merger
Agreement and which adversely affects the rights of the Shareholder Group under
the terms of this Agreement or (ii) adopt any new rights agreement which is
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inconsistent with the terms of this Agreement or the Merger Agreement and which
adversely affects the rights of the Shareholder Group under the terms of this
Agreement.
Section 3.7. SPECIAL MEETINGS REQUESTED BY THE SHAREHOLDER;
NOMINATIONS. In the event that during the term of this Agreement the
Shareholder Group requests a special meeting of the stockholders of the Company
in accordance with the By-Laws, or the Shareholder Group nominates an
alternative slate of directors to the slate proposed by the Board at any annual
meeting of stockholders of the Company in accordance with the By-Laws, the
Company hereby agrees that the Company shall not, without the Shareholder's
consent, from the date of receipt of such request for a special meeting or the
date of receipt of such nomination, as the case may be, until the adjournment of
the requested special meeting or the annual meeting, as the case may be,
(i) take any action effecting a material change in its capital structure,
(ii) declare or pay a dividend (other than any regular quarterly dividend),
(iii) materially increase the compensation of any executive officer or
(iv) take any material action not in the ordinary course of business; PROVIDED
that this provision shall not restrict the ability of the Company to comply with
commitments entered into prior to the date of such request.
Section 3.8. NO AGREEMENTS. During the term of this Agreement, except as
specifically contemplated in Section 3.9, no member of the Shareholder Group
shall, directly or indirectly, enter into any agreement or commitment with any
member of the Pohlad Group with respect to the holding, voting, acquisition or
disposition of Voting Securities.
Section 3.9. DAKOTA HOLDINGS. Notwithstanding the provisions of
Section 3.8, members of the Shareholder Group and members of the Pohlad Group
may be parties to the Amended and Restated Limited Liability Company Agreement
of Dakota Holdings, LLC, attached as Annex A to this Agreement (the "DAKOTA
HOLDINGS AGREEMENT"), and hold interests in Dakota Holdings pursuant to the
Dakota Holdings Agreement, PROVIDED that (i) the Dakota Holdings Agreement
expressly provides that (x) the members of the Shareholder Group who are parties
to the Dakota Holdings Agreement ultimately have sole power with respect to the
voting of [ ] of the Voting Securities owned by Dakota Holdings, and with
respect to the voting of such Voting Securities members of the Pohlad Group
shall have no power, influence or discretion, and (y) the members of the Pohlad
Group who are parties to the Dakota Holdings Agreement have sole power with
respect to the voting of [ ] of the Voting Securities owned by Dakota
Holdings, and with respect to the voting of such Voting Securities members of
the Shareholder Group shall have no power, influence or discretion which is not
subject to the ultimate power of the Pohlad Group to direct the voting; and
(ii) Dakota Holdings shall not take any action to acquire, directly or
indirectly, Beneficial Ownership of any additional Voting Securities (excluding
any Voting Securities acquired pursuant to the transactions contemplated by the
Merger Agreement (including any Contingent Payment Acquisitions) and excluding
Voting Securities acquired through stock dividends on then-owned Voting
Securities and excluding the acquisition of Voting Securities pursuant to the
right of Dakota Holdings to acquire Common Stock with a value of $25 million
from the PepsiCo Group, in connection with the Merger). So long as the proviso
in the preceding sentence is complied with, for purposes of calculating the
Shareholder Group's Total Ownership Percentage, those Voting Securities over
which a member of the Pohlad Group has the sole powers described in clause (y)
of clause (i) in the proviso in the preceding sentence shall not be considered
Beneficially Owned by the Shareholder Group and a transfer of interests in
Dakota Holdings from a member of the Pohlad Group to a member of the Shareholder
Group shall be permitted with the consent of the Affiliated Transaction
Committee (or, if such Committee shall not be in existence, by a committee of
the Board composed entirely of Independent Directors), which consent shall not
be unreasonably withheld.
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ARTICLE IV
BOARD COMPOSITION
Section 4.1. BOARD COMPOSITION. As of the Effective Time (as defined in
the Merger Agreement) of the Merger, the Board shall consist of the current
directors of the Company and Robert Pohlad.
ARTICLE V
EFFECTIVENESS AND TERMINATION
Section 5.1. EFFECTIVENESS. This Agreement shall take effect immediately
upon the Closing and shall remain in effect until it is terminated pursuant to
Section 5.2 hereof.
Section 5.2. TERMINATION. This Agreement shall terminate upon the earliest
to occur of the following:
(a) The Shareholder Group's Total Ownership Percentage falling below 15%
at any time;
(b) Subject to the provisions of Section 5.3, the consummation of a
Permitted Acquisition pursuant to which the Shareholder Group becomes the
Beneficial Owner of not less than that percentage of the Voting Power
attributable to all Voting Securities of the Company equal to 75% less the
Pohlad Group's Voting Power;
(c) Two (2) years from the first date on which the following two
conditions are met: (i) the Shareholder Group has become the Beneficial
Owner of a percentage of the Voting Power attributable to all Voting
Securities of the Company which is greater than (x) 55% less the Pohlad
Group's Voting Power, but less than (y) 75% less the Pohlad Group's Voting
Power, and (ii) the Shareholder Group has consummated a Shareholder Offer at
a price which is not less than the Minimum Price pursuant to which at least
10% of the Voting Power attributable to Voting Securities not Beneficially
Owned by the Significant Shareholders prior to such Shareholder Offer were
acquired by the Shareholder Group; or
(d) Mutual written agreement of the Company and the Shareholder at any
time to terminate this Agreement, which termination shall occur at a time to
be fixed in such mutual agreement.
Section 5.3. AGREEMENTS FOLLOWING CERTAIN ACQUISITIONS. Following the
consummation of a Permitted Acquisition pursuant to which the Shareholder Group
becomes the Beneficial Owner of not less than that percentage of the Voting
Power attributable to all Voting Securities of the Company equal to 75% less the
Pohlad Group's Voting Power, the Company agrees that for a period of 90 days
after such Permitted Acquisition it shall not, without the Shareholder's
consent, take any action or enter into any agreement which (i) restricts the
acquisition by the Shareholder Group of any Voting Securities, notwithstanding
that such acquisition is not a Permitted Acquisition, (ii) restricts in any
manner the transfer of any such Voting Securities by the Shareholder Group,
(iii) restricts any right of the Shareholder Group specifically preserved under
Section 3.1, (iv) otherwise restricts in any manner the ability of any member of
the Shareholder Group to take any action with respect to Voting Securities,
including, in the case of clauses (i) through (iv), amending the Rights
Agreement to provide for any such restriction, (v) effects a material change in
the capital structure, (vi) declares or pays a dividend (other than any regular
quarterly dividend), (vii) materially increases the compensation of any
executive officer or (viii) is a material action not in the ordinary course of
business; PROVIDED that this provision shall not restrict the ability of the
Company to comply with commitments entered into prior to the date of such
Permitted Acquisition.
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ARTICLE VI
MISCELLANEOUS
Section 6.1. INJUNCTIVE RELIEF. Each party hereto acknowledges that it
would be impossible to determine the amount of damages that would result from
any breach of any of the provisions of this Agreement and that the remedy at law
for any breach, or threatened breach, of any of such provisions would likely be
inadequate and, accordingly, agrees that each other party shall, in addition to
any other rights or remedies which it may have, be entitled to seek such
equitable and injunctive relief as may be available from any court of competent
jurisdiction to compel specific performance of, or restrain any party from
violating, any of such provisions. In connection with any action or proceeding
for injunctive relief, each party hereto hereby waives the claim or defense that
a remedy at law alone is adequate and agrees, to the maximum extent permitted by
law, to have each provision of this Agreement specifically enforced against him
or it, without the necessity of posting bond or other security against him or
it, and consents to the entry of injunctive relief against him or it enjoining
or restraining any breach or threatened breach of such provisions of this
Agreement.
Section 6.2. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon,
shall inure to the benefit of and shall be enforceable by the Company and by the
Shareholder and their respective successors and permitted assigns, and no such
term or provision is for the benefit of, or intended to create any obligations
to, any other Person.
Section 6.3. AMENDMENTS; WAIVER. (a) This Agreement may be amended only by
an agreement in writing executed by the parties hereto. Any approval of an
amendment of this Agreement upon the part of the Company shall require the
approval of a majority of the Independent Directors at a duly convened meeting
thereof.
(b) Either party may waive in whole or in part any benefit or right provided
to it under this Agreement, such waiver being effective only if contained in a
writing executed by the waiving party. No failure by any party to insist upon
the strict performance of any covenant, duty, agreement or condition of this
Agreement or to exercise any right or remedy consequent upon breach thereof
shall constitute a waiver of any such breach or of any other covenant, duty,
agreement or condition, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such right
accruing to it thereafter. Any waiver of any benefit or right provided to the
Company under this Agreement shall require the approval of a majority of the
Board and a majority of the Independent Directors at a duly convened meeting
thereof.
Section 6.4. NOTICES. Except as otherwise provided in this Agreement, all
notices, requests, claims, demands, waivers and other communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
by hand, when delivered personally or by courier, three days after being
deposited in the mail (registered or certified mail, postage prepaid, return
receipt requested), or when received by facsimile transmission if promptly
confirmed by one of the foregoing means, as follows:
If to the Shareholder:
PepsiCo, Inc.
700 Anderson Hill Road
Purchase, NY 10577
Attention: General Counsel
Fax: (914) 253-3667
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with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Robert Townsend
Fax: (212) 765-1047
If to the Company:
Whitman Corporation
3501 Algonquin Road
Rolling Meadows, Illinois 60008
Attention: General Counsel
Fax: (847) 818-5047
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: Seth A. Kaplan
Fax: (212) 403-2223
or to such other address or facsimile number as either party may, from time to
time, designate in a written notice given in a like manner.
Section 6.5. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware without
giving effect to principles of conflicts of law.
Section 6.6. HEADINGS. The descriptive headings of the several sections in
this Agreement are for convenience only and do not constitute a part of this
Agreement and shall not be deemed to limit or affect in any way the meaning or
interpretation of this Agreement.
Section 6.7. INTEGRATION. This Agreement and the other writings referred
to herein or delivered pursuant hereto which form a part hereof contain the
entire understanding of the parties with respect to its subject matter. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to its subject matter. There are no restrictions, agreements,
promises, representations, warranties, covenants or undertakings with respect to
its subject matter other than those expressly set forth or referred to herein.
Section 6.8. SEVERABILITY. If any term or provision of this Agreement or
any application thereof shall be declared or held invalid, illegal or
unenforceable, in whole or in part, whether generally or in any particular
jurisdiction, such provision shall be deemed amended to the extent, but only to
the extent, necessary to cure such invalidity, illegality or unenforceability,
and the validity, legality and enforceability of the remaining provisions, both
generally and in every other jurisdiction, shall not in any way be affected or
impaired thereby.
Section 6.9. CONSENT TO JURISDICTION. In connection with any suit, claim,
action or proceeding arising out of this Agreement, the Shareholder and the
Company each hereby consent to the in personam jurisdiction of the United States
federal courts and state courts located in the State of Delaware; the
Shareholder and the Company each agree that service in the manner set forth in
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Section 6.4 hereof shall be valid and sufficient for all purposes; and the
Shareholder and the Company each agree to, and irrevocably waive any objection
based on forum non conveniens or venue not to, appear in any United States
federal court or state court located in the State of Delaware.
Section 6.10. COUNTERPARTS. This Agreement may be executed by the parties
hereto in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and the Shareholder have caused this
Agreement to be duly executed by their respective authorized officers as of the
date set forth at the head of this Agreement.
<TABLE>
<S> <C> <C>
WHITMAN CORPORATION
By:
-----------------------------------------
Name:
Title:
PEPSICO, INC. (on behalf of itself and all
members of the Shareholder Group)
By:
-----------------------------------------
Name:
Title:
</TABLE>
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<PAGE>
ANNEX H
--------------------------------------------------------------------------------
SHAREHOLDER AGREEMENT
By and Between
WHITMAN CORPORATION,
A DELAWARE CORPORATION,
POHLAD COMPANIES,
A MINNESOTA CORPORATION
DAKOTA HOLDINGS, LLC,
A DELAWARE LIMITED LIABILITY COMPANY
and
ROBERT POHLAD
Dated as of [ ], 2000
--------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. Certain Definitions......................................... 1
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations and Warranties of the Company............... 5
Section 2.2. Representations and Warranties of the Shareholder........... 5
ARTICLE III
SHAREHOLDER AND COMPANY CONDUCT
Section 3.1. Acquisition of Voting Securities............................ 5
Section 3.2. Required Reduction of Ownership Percentage.................. 6
Section 3.3. Top-Up Rights............................................... 7
Section 3.4. Charter and By-Laws......................................... 7
Section 3.5. Rights Agreement............................................ 8
Section 3.6. No Agreements............................................... 8
Section 3.7. Dakota Holdings............................................. 8
Special Meetings Requested by the Shareholder;
Section 3.8. Nominations............................................... 8
Section 3.9. Options..................................................... 9
ARTICLE IV
BOARD COMPOSITION; CHIEF EXECUTIVE
Section 4.1. Board Composition; Chief Executive.......................... 9
ARTICLE V
EFFECTIVENESS AND TERMINATION
Section 5.1. Effectiveness............................................... 9
Section 5.2. Termination................................................. 9
ARTICLE VI
MISCELLANEOUS
Section 6.1. Injunctive Relief........................................... 9
Section 6.2. Successors and Assigns...................................... 9
Section 6.3. Amendments; Waiver.......................................... 10
Section 6.4. Notices..................................................... 10
Section 6.5. Applicable Law.............................................. 11
Section 6.6. Headings.................................................... 11
Section 6.7. Integration................................................. 11
Section 6.8. Severability................................................ 11
Section 6.9. Consent to Jurisdiction..................................... 11
Section 6.10. Counterparts................................................ 11
</TABLE>
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SHAREHOLDER AGREEMENT, dated as of [ ], 2000 (this "AGREEMENT"),
by and between Whitman Corporation, a Delaware corporation (the "COMPANY"),
Pohlad Companies, a Minnesota corporation, Dakota Holdings, LLC, a Delaware
limited liability company ("DAKOTA HOLDINGS") and Robert Pohlad.
W I T N E S S E T H:
WHEREAS, the Company, Anchor Merger Sub, Inc., a Delaware corporation
("MERGER SUB"), and PepsiAmericas, Inc., a Delaware corporation ("PAS"), have
entered into an Agreement and Plan of Merger, dated as of August 18, 2000 (the
"MERGER AGREEMENT"), pursuant to which, among other things, PAS will be merged
with and into Merger Sub, with Merger Sub as the surviving corporation, and in
connection therewith, certain outstanding shares of common stock of PAS will be
converted into shares of common stock, par value $0.01 per share (the "COMMON
STOCK"), of the Company (the "MERGER");
WHEREAS, the execution of this Agreement upon the consummation of the Merger
(the "CLOSING") is a covenant of the Company and PAS in the Merger Agreement and
a condition to the Company's obligations to close the transactions contemplated
by the Merger Agreement;
WHEREAS, Dakota Holdings is a shareholder of PAS and will be receiving
Common Stock in the Merger;
WHEREAS, Pohlad Companies is the managing member of PAS; and
WHEREAS, in light of the transactions contemplated by the Merger Agreement,
the Company and the Shareholders (as defined herein) desire to set forth in this
Agreement certain terms and conditions concerning the acquisition and
disposition of Voting Securities (as defined herein) of the Company by the
Shareholder Group (as defined herein), and related provisions concerning the
Shareholder Group's relationship with and investment in the Company immediately
following the Closing.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. CERTAIN DEFINITIONS. In addition to other terms defined
elsewhere in this Agreement, as used in this Agreement, the following terms
shall have the meanings ascribed to them below:
"AFFILIATE" shall mean, with respect to any person, any other person that
directly or indirectly through one or more intermediaries controls or is
controlled by or is under common control with such person. For the purposes of
this definition, "control," when used with respect to any particular person,
means the power to direct the management and policies of such person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"AFFILIATED TRANSACTION COMMITTEE" shall mean the Affiliated Transaction
Committee of the Board.
"AGREEMENT" shall have the meaning assigned to such term in the preamble.
"BENEFICIAL OWNER" (and, with correlative meanings, "BENEFICIALLY OWN" and
"BENEFICIAL OWNERSHIP") of any interest means a Person who, together with his or
its Affiliates, is or may be deemed a beneficial owner of such interest for
purposes of Rule 13d-3 or 13d-5 under the Exchange Act, or who, together with
his or its Affiliates, has the right to become such a beneficial owner of such
interest (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement,
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arrangement or understanding, or upon the exercise, conversion or exchange of
any warrant, right or other instrument, or otherwise; PROVIDED that a Person
shall not be deemed the Beneficial Owner of Voting Securities solely as a result
of having been granted a revocable proxy relating to such Voting Securities in
connection with any one special or annual meeting of shareholders of the Company
(including any postponements or adjournments thereof), nor shall the procurement
of such a proxy be deemed to give the proxy holder "control" over any Person as
to which such proxy holder does not otherwise have control; and PROVIDED,
FURTHER, that this definition shall be subject to the last sentence of
Section 3.7.
"BOARD" shall mean the Board of Directors of the Company in office at the
applicable time, as elected in accordance with the By-Laws.
"BUY-BACK EXCESS" shall have the meaning set forth in Section 3.2 of this
Agreement.
"BUY-BACK OFFER" shall have the meaning set forth in Section 3.2 of this
Agreement.
"BY-LAWS" shall mean the by-laws of the Company, as in effect immediately
following consummation of the Merger (including amendments pursuant to the
Merger Agreement), as they may be amended from time to time.
"CHARTER" shall mean the Certificate of Incorporation of the Company, as in
effect immediately following consummation of the Merger, as it may be amended
from time to time.
"CLOSING" shall have the meaning assigned in the second recital of this
Agreement.
"COMBINED MAXIMUM OWNERSHIP PERCENTAGE" shall mean, calculated at a
particular point in time, a Total Ownership Percentage of 49.9%; PROVIDED that
in the event of a Permitted Acquisition (other than a Contingent Payment
Acquisition) which results in the Significant Shareholders' Total Ownership
Percentage exceeding 49.9%, so long as the Significant Shareholders' Total
Ownership Percentage exceeds 49.9% due to such Permitted Acquisition, the
Combined Maximum Ownership Percentage shall become the Significant Shareholders'
Total Ownership Percentage giving effect to such Permitted Acquisition.
"COMMISSION" shall mean the United States Securities and Exchange
Commission.
"COMMON STOCK" shall have the meaning assigned in the first recital of this
Agreement.
"COMPANY" shall have the meaning assigned in the preamble.
"CONTINGENT PAYMENT ACQUISITION" shall mean any acquisition of Voting
Securities pursuant to any Contingent Payment (as defined in the Merger
Agreement).
"DAKOTA HOLDINGS AGREEMENT" shall have the meaning set forth in Section 3.7
of this Agreement.
"DIRECTOR" shall mean any member of the Board of Directors of the Company in
office at the applicable time, as elected in accordance with the provisions of
the By-Laws.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"FAMILY" shall mean, with respect to any natural person, (i) any child,
stepchild, parent, stepparent, spouse or sibling, and (ii) any grandchild,
grandparent, uncle, aunt, first cousin, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law who Beneficially
Owns greater than 1% of the Voting Power or who has entered into an agreement or
commitment with said natural person with respect to the Voting Securities, and
shall in each case include adoptive relationships.
"INDEPENDENT DIRECTOR" shall mean any person who is both (i) independent of
and otherwise unaffiliated with any member of the Shareholder Group or the
PepsiCo Group, and who is not a director, officer, employee, consultant or
advisor (financial, legal or other) of any member of the Shareholder Group or
the PepsiCo Group and has not served in any such capacity in the previous two
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(2) years and (ii) not an officer or employee, consultant or advisor (financial,
legal or other) of the Company and has not served in any such capacity in the
previous two (2) years.
"MAXIMUM OWNERSHIP PERCENTAGE" shall mean, calculated at a particular point
in time, a Total Ownership Percentage of % [(the "Shareholder Group's Closing
Ownership Percentage", which shall mean the Shareholder Group's Total Ownership
Percentage calculated as of Closing on a fully diluted basis assuming conversion
of all options (including, but not limited to options to acquire shares of PAS
stock Beneficially Owned by members of the Shareholder Group) and purchases to
be made at Closing (including the right of Dakota Holdings to purchase
Subscription Shares pursuant to Section 4.7 of the Merger Agreement and the
right of Dakota Holdings to acquire Common Stock with a value of $25 million
from the PepsiCo Group)]; PROVIDED that in the event of a Permitted Acquisition
(including any Contingent Payment Acquisition) which results in the Shareholder
Group's Total Ownership Percentage exceeding % [the Shareholder Group's
Closing Ownership Percentage], so long as the Shareholder Group's Total
Ownership Percentage exceeds % [Shareholder Group's Closing Ownership
Percentage] due to such Permitted Acquisition, the Maximum Ownership Percentage
shall become the Shareholder Group's Total Ownership Percentage giving effect to
such Permitted Acquisition.
"MERGER" shall have the meaning set forth in the first recital of this
Agreement.
"MERGER AGREEMENT" shall have the meaning set forth in the first recital of
this Agreement.
"NYSE" shall mean the New York Stock Exchange, Inc.
"PEPSICO" shall mean PepsiCo, Inc., a North Carolina corporation.
"PEPSICO AFFILIATE" shall mean any Affiliate of PepsiCo (other than the
Company or its subsidiaries).
"PEPSICO GROUP" shall mean PepsiCo, any PepsiCo Affiliate, any Permitted
Significant Transferee (as defined in the PepsiCo Shareholder Agreement) and any
Person with whom PepsiCo, any PepsiCo Affiliate or any Permitted Significant
Transferee is part of a 13D Group, but shall exclude any member of the Pohlad
Group.
"PEPSICO SHAREHOLDER AGREEMENT" shall mean the Amended and Restated
Shareholder Agreement, dated as of [ ], 2000, by and between the Company
and PepsiCo.
"PERMITTED ACQUISITION" shall mean the acquisition of Voting Securities
pursuant to (1) a transaction or series of transactions that would not result,
individually or in the aggregate, in any member of the Shareholder Group, singly
or as part of a partnership, limited partnership, syndicate or other 13D Group,
directly or indirectly, acquiring, proposing to acquire, or publicly announcing
or otherwise disclosing an intention to propose to acquire, or offering or
agreeing to acquire, by purchase or otherwise, Beneficial Ownership of any
Security so as to cause either (x) the Shareholder Group's Total Ownership
Percentage to exceed the Maximum Ownership Percentage or (y) the Significant
Shareholders' Total Ownership Percentage to exceed the Combined Maximum
Ownership Percentage, (2) the acquisition of Voting Securities pursuant to any
Contingent Payment Acquisition or pursuant to any transaction contemplated by
the Merger Agreement, (3) the acquisition of Voting Securities pursuant to the
right of Dakota Holdings to acquire Common Stock with a value of $25 million
from the PepsiCo Group, in connection with the Merger; (4) a transaction
(including the grant of any options to purchase Common Stock granted to any
member of the Shareholder Group) approved by the Affiliated Transaction
Committee (or, if such Committee shall not be in existence, by a committee of
the Board composed entirely of Independent Directors), or (5) any acquisition of
Voting Securities by the PepsiCo Group permitted under the PepsiCo Shareholder
Agreement.
"PERSON" shall mean any individual, partnership, joint venture, corporation,
trust, unincorporated organization, government or department or agency of a
government.
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"REPURCHASE" shall have the meaning set forth in Section 3.2 of this
Agreement.
"RIGHTS AGREEMENT" shall mean the Shareholder Rights Agreement, dated as of
May 20, 1999, as amended.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SHAREHOLDERS" shall mean, collectively Pohlad Companies, Dakota Holdings
and Robert Pohlad, PROVIDED that Pohlad Companies shall only be deemed a
Shareholder under this Agreement so long as Pohlad Companies is a member of the
Shareholder Group.
"SHAREHOLDER GROUP" shall mean Robert Pohlad, any Affilate of Robert Pohlad
(other than the Company or its subsidiaries), any member of Robert Pohlad's
Family, and any Person with whom Robert Pohlad, any Affiliate of Robert Pohlad
or any member of Robert Pohlad's Family is part of a 13D Group.
"SIGNIFICANT SHAREHOLDERS" shall mean, collectively, the Shareholder Group
and the PepsiCo Group.
"13D GROUP" shall mean any group of Persons acquiring, holding, voting or
disposing of any Voting Security which would be required under Section 13(d) of
the Exchange Act and the rules and regulations thereunder to file a statement on
Schedule 13D with the Commission as a "person" within the meaning of
Section 13(d)(3) of the Exchange Act; PROVIDED that a Person shall not be deemed
to be part of a 13D Group with another Person solely as a result of having been
granted a revocable proxy relating to such Person's Voting Securities in
connection with any one special or annual meeting of shareholders of the Company
(including any postponements or adjournments thereof); PROVIDED, FURTHER, that
the members of the Shareholder Group shall not be deemed to be part of a 13D
Group with any member of the PepsiCo Group solely due to ownership of interests
in Dakota Holdings so long as all members of the Shareholder Group are in
compliance with the proviso in the first sentence of Section 3.7.
"TOTAL OWNERSHIP PERCENTAGE" shall mean, calculated at a particular point in
time, the Voting Power represented by the Voting Securities Beneficially Owned
by the Person (or Persons) whose Total Ownership Percentage is being determined.
"TOTAL VOTING POWER" shall mean, calculated at a particular point in time,
the aggregate Votes represented by all then outstanding Voting Securities.
"TRADING DAY", with respect to a Voting Security, shall mean a day on which
the principal national securities exchange on which such Voting Security is
listed or admitted to trading is open for the transaction of business or, if
such security is not listed or admitted to trading on any national securities
exchange, any day other than a Saturday, Sunday or a day on which banking
institutions in the City of New York are authorized or obligated to close.
"TRANSFER" shall mean any sale, transfer, pledge, encumbrance or other
disposition to any Person, and to "TRANSFER" shall mean to sell, transfer,
pledge, encumber or otherwise dispose of to any Person.
"VOTES" shall mean votes entitled to be cast generally in the election of
Directors, assuming the conversion of any securities then convertible into
Common Stock or shares of any other class of capital stock of the Company then
entitled to vote generally in the election of Directors.
"VOTING POWER" shall mean, calculated at a particular point in time, the
ratio, expressed as a percentage, of (a) the Votes represented by the Voting
Securities with respect to which the Voting Power is being determined to
(b) Total Voting Power.
"VOTING SECURITIES" shall mean the Common Stock and shares of any other
class of capital stock of the Company then entitled to vote generally in the
election of Directors and any securities then
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convertible into Common Stock or shares of any other class of capital stock of
the Company then entitled to vote generally in the election of Directors.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Shareholders as of the date hereof as follows:
(a) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware and has
all necessary corporate power and authority to enter into this Agreement and
to carry out its obligations hereunder.
(b) This Agreement has been duly and validly authorized by the Company
and all necessary and appropriate action has been taken by the Company to
execute and deliver this Agreement and to perform its obligations hereunder.
(c) This Agreement has been duly executed and delivered by the Company
and assuming due authorization and valid execution and delivery by each of
the Shareholders, this Agreement is a valid and binding obligation of the
Company, enforceable against it in accordance with its terms.
Section 2.2. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. Each of
the Shareholders and Dakota Holdings represents and warrants to the Company as
of the date hereof as follows:
(a) Each of Pohlad Companies and Dakota Holdings has been duly organized
and is validly existing and in good standing under the laws of its state of
organization and has all necessary power and authority to enter into this
Agreement and to carry out its obligations hereunder.
(b) This Agreement has been duly and validly authorized by each of
Pohlad Companies and Dakota Holdings and all necessary and appropriate
action has been taken by each of Pohlad Companies and Dakota Holdings to
execute and deliver this Agreement and to perform its obligations hereunder.
(c) This Agreement has been duly executed and delivered by each of
Pohlad Companies, Dakota Holdings and Robert Pohlad and assuming due
authorization and valid execution and delivery by the Company, this
Agreement is a valid and binding obligation of each of Pohlad Companies,
Dakota Holdings and Robert Pohlad, enforceable against each of Pohlad
Companies, Dakota Holdings and Robert Pohlad in accordance with its terms.
ARTICLE III
SHAREHOLDER AND COMPANY CONDUCT
Section 3.1. ACQUISITION OF VOTING SECURITIES. Subject to the provisions
of this Agreement, during the term of this Agreement, the Shareholders agree
with the Company that, without the prior approval of the Affiliated Transaction
Committee, the Shareholders will not, and will cause each member of the
Shareholder Group not to, take any of the following actions:
(a) singly or as part of a partnership, limited partnership, syndicate
or other 13D Group, directly or indirectly, acquire, propose to acquire, or
publicly announce or otherwise disclose an intention to propose to acquire,
or offer or agree to acquire, by purchase or otherwise, Beneficial Ownership
of any Voting Security so as to cause either (x) the Shareholder Group's
Total Ownership Percentage to exceed the Maximum Ownership Percentage or
(y) to the best of the Shareholder's knowledge, the Significant
Shareholders' Total Ownership Percentage to exceed the Combined Maximum
Ownership Percentage, other than pursuant to a Permitted Acquisition;
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(b) form, join or in any way participate in a 13D Group with respect to
any Voting Securities of the Company or any securities of its subsidiaries
if such 13D Group's Total Ownership Percentage would exceed the Maximum
Ownership Percentage;
(c) initiate (including by means of publicly proposing or announcing or
otherwise disclosing an intention to propose, solicit, offer, seek to effect
or negotiate) a merger, acquisition or other business combination
transaction relating to the Company (other than a merger, acquisition or
business combination of a third party (not a member of the Shareholder
Group) with the Company) which would not be, if consummated, a Permitted
Acquisition.
The Shareholder Group shall not be prohibited by the terms of this Agreement
from taking any action or exercising any right which is not inconsistent with
the terms of this Agreement, including soliciting or obtaining the revocable
proxy of any other shareholder of the Company with respect to the election of
directors or any other matter, seeking the election of new directors, calling
special meetings of shareholders of the Company, making shareholder proposals,
engaging in discussions with the Board or the management of the Company or
otherwise voting its Voting Securities in any manner in which any member of the
Shareholder Group shall determine in its sole discretion. In addition, this
section shall not be deemed to restrict Directors affiliated with the
Shareholders from participating as officers or Board members in the direction of
the Company.
Section 3.2. REQUIRED REDUCTION OF OWNERSHIP PERCENTAGE. (a) If at any
time the Shareholders become aware that the Shareholder Group's Total Ownership
Percentage exceeds the Maximum Ownership Percentage, other than as permitted
pursuant to the terms of this Agreement, then the Shareholders shall, or shall
cause the Shareholder Group to, consistent with the provisions of this
Agreement, promptly (in any event, prior to the earliest to occur of (i) the
record date for the next annual or special meeting of shareholders of the
Company, (ii) the record date for the taking of any action of shareholders of
the Company by written consent or (iii) the purchase of any additional Voting
Securities by any member of the Shareholder Group) take all action necessary to
reduce the amount of Voting Securities Beneficially Owned by the Shareholder
Group such that the Shareholder Group's Total Ownership Percentage is not
greater than the Maximum Ownership Percentage.
(b) If at any time the Shareholder becomes aware that the Significant
Shareholders' Total Ownership Percentage exceeds the Combined Maximum Ownership
Percentage as a result of a reduction in the number of Voting Securities
outstanding (including, without limitation, as a result of a purchase of Common
Stock by the Company) (such excess, the "BUY-BACK EXCESS"), then the Shareholder
shall, or shall cause the Shareholder Group to, consistent with the provisions
of this Agreement, promptly (in any event, prior to the earliest to occur of
(x) the record date for the next annual or special meeting of shareholders of
the Company, (y) the record date for the taking of any action of shareholders of
the Company by written consent or (z) the purchase of any additional Voting
Securities by any member of the Shareholder Group) take all action necessary to
reduce the amount of Voting Securities Beneficially Owned by the Shareholder
Group by the amount of such Buy-Back Excess in the following manner and order:
(i) First, for purposes of clauses (ii) and (iii) below, the Buy-Back
Excess shall be reduced by the amount, if any, of Voting Securities received
by the PepsiCo Group as an Aggregate Contingent Payment (as defined in the
Merger Agreement), to the extent such Aggregate Contingent Payment has not
been previously used to reduce the Buy-Back Excess pursuant to this Section;
(ii) Second, by Transferring to a Person other than the Significant
Shareholders the pro rata amount (based on the relative amounts of Voting
Securities purchased by each of the Shareholder Group and the PepsiCo Group
since August [18], 2000) of Voting Securities, if any, purchased by the
Shareholder Group since August [18], 2000;
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(iii) Third, by Transferring to a Person other than the Significant
Shareholders the pro rata amount of any remaining Buy-Back Excess (based on
the relative Total Ownership Percentages, after giving effect to (i) and
(ii) above, of the Shareholder Group and the PepsiCo Group immediately prior
to the time when the Combined Maximum Ownership Percentage was exceeded);
(iv) Fourth, notwithstanding the foregoing, the maximum number of Voting
Securities that the Shareholder Group shall be required to Transfer pursuant
to (ii) and (iii) above shall not exceed the amount that would be required
to be Transferred if the PepsiCo Group made its corresponding pro rata
Transfers consistent with (ii) and (iii) above.
(c) If at any time the Shareholders become aware that the Significant
Shareholders' Total Ownership Percentage exceeds the Combined Maximum Ownership
Percentage, other than as a result of a reduction in the total number of Voting
Securities (which situation shall be governed by paragraph (b) above) or as
permitted pursuant to the terms of this Agreement, then the Shareholders shall,
or shall cause the Shareholder Group to, consistent with the provisions of this
Agreement, promptly (in any event, prior to the earliest to occur of (i) the
record date for the next annual or special meeting of shareholders of the
Company, (ii) the record date for the taking of any action of shareholders of
the Company by written consent or (iii) the purchase of any additional Voting
Securities by any member of the Shareholder Group) take all action necessary to
reduce the amount of Voting Securities Beneficially Owned by the Shareholder
Group such that the Significant Shareholders' Total Ownership Percentage is not
greater than the Combined Maximum Ownership Percentage; provided that if the
Shareholder becomes aware that the Significant Shareholders' Total Ownership
Percentage exceeds the Combined Maximum Ownership Percentage due to an
acquisition by a member of the PepsiCo Group of Voting Securities or the
addition to the PepsiCo Group of a new Affiliate that Beneficially Owns Voting
Securities, the Shareholder shall promptly inform the Company of such fact but
shall not be required to reduce the amount of Voting Securities Beneficially
Owned by the Shareholder Group due to such event so long as the Shareholder
Group is in compliance with the other provisions of this Agreement.
(d) During the term of this Agreement, if the Company purchases shares of
Common Stock from the public, whether by tender offer, open market purchase or
otherwise (a "REPURCHASE"), the Company shall contemporaneously with the
Repurchase offer to purchase from the Shareholder Group, on the same terms and
conditions, including price, as in the Repurchase, a percentage of those shares
of Common Stock Beneficially Owned by the Shareholder Group equal to the
percentage of shares of Common Stock to be Repurchased from the Beneficial
Owners of shares of Common Stock other than the Shareholder Group (the "BUY-BACK
OFFER"). The Company shall provide notice to the Shareholders of its intention
to engage in a Repurchase and of the mechanism by which the Repurchase shall
occur not less than thirty (30) days in advance of the date on which the
Repurchase is to be consummated, and the Shareholders shall provide notice to
the Company within ten (10) days of receipt of such notice of whether the
Shareholder Group intends to accept the Buy-Back Offer.
Section 3.3. TOP-UP RIGHTS. During the term of this Agreement, if the
Shareholder Group's Total Ownership Percentage is below the Maximum Ownership
Percentage and the Significant Shareholders' Total Ownership Percentage is below
the Combined Maximum Ownership Percentage, the Shareholder Group may at its
option purchase Voting Securities from time to time in the open market or
otherwise in an amount not in excess of the amount that would cause either
(x) the Shareholder Group's Total Ownership Percentage to exceed the Maximum
Ownership Percentage or (y) the Significant Shareholders' Total Ownership
Percentage to exceed the Combined Maximum Ownership Percentage.
Section 3.4. CHARTER AND BY-LAWS. During the term of this Agreement the
Company shall not, and the Shareholder Group shall not, and shall not facilitate
any effort to, amend, alter or repeal, or propose the amendment, alteration or
repeal of, any provision of the Charter or the By-Laws in any
H-7
<PAGE>
manner which is inconsistent with the terms of this Agreement. If at any time
during the term of this Agreement the provisions of this Agreement shall
conflict with the provisions of the Charter or the By-Laws, the parties shall
use all reasonable efforts, consistent with their fiduciary responsibilities, to
cause the provisions of the Charter and the By-Laws to be brought into
conformity with the provisions of this Agreement.
Section 3.5. RIGHTS AGREEMENT. During the term of this Agreement, the
Company hereby agrees not to (i) amend any provision of the Rights Agreement in
any manner which is inconsistent with the terms of this Agreement or the Merger
Agreement and which adversely affects the rights of the Shareholder Group under
the terms of this Agreement or (ii) adopt any new rights agreement which is
inconsistent with the terms of this Agreement or the Merger Agreement and which
adversely affects the rights of the Shareholder Group under the terms of this
Agreement.
Section 3.6. NO AGREEMENTS. During the term of this Agreement, except as
specifically contemplated in Section 3.7, no member of the Shareholder Group
shall, directly or indirectly, enter into any agreement or other understanding
with any member of the PepsiCo Group with respect to the holding, voting,
acquisition or disposition of Voting Securities.
Section 3.7. DAKOTA HOLDINGS. Notwithstanding the provisions of
Section 3.6, members of the Shareholder Group (whether existing or newly formed)
and members of the PepsiCo Group may be parties to the Amended and Restated
Limited Liability Company Agreement of Dakota Holdings, attached as Annex A to
this Agreement (the "DAKOTA HOLDINGS AGREEMENT"), and to hold interests in
Dakota Holdings pursuant to the Dakota Holdings Agreement, PROVIDED that
(i) the Dakota Holdings Agreement expressly provides that (x) the members of the
Shareholder Group who are parties to the Dakota Holdings Agreement have sole
power with respect to the voting of [ ] of the Voting Securities owned by
Dakota Holdings and with respect to the voting of such Voting Securities members
of the PepsiCo Group shall have no power, influence or discretion, and (y) the
members of the PepsiCo Group who are parties to the Dakota Holdings Agreement
ultimately have sole power with respect to the voting of [ ] of the Voting
Securities owned by Dakota Holdings and with respect to the voting of such
Voting Securities members of the Shareholder Group shall have no power,
influence or discretion which is not subject to the ultimate power of the
PepsiCo Group to direct the voting; and (ii) Dakota Holdings shall not take any
action to acquire, directly or indirectly, Beneficial Ownership of any
additional Voting Securities (excluding any Voting Securities acquired pursuant
to transactions contemplated by the Merger Agreement (including any Contingent
Payment Acquisitions) and excluding Voting Securities acquired through stock
dividends on then-owned Voting Securities and excluding the acquisition of
Voting Securities pursuant to the right of Dakota Holdings to acquire Common
Stock with a value of $25 million from the PepsiCo Group, in connection with the
Merger). So long as the proviso in the preceding sentence is complied with, for
purposes of calculating the Shareholder Group's Total Ownership Percentage,
those Voting Securities over which a member of the PepsiCo Group has the sole
powers described in clause (y) of clause (i) in the proviso in the preceding
sentence shall not be considered Beneficially Owned by the Shareholder Group and
a transfer of interests in Dakota Holdings from a member of the Shareholder
Group to a member of the PepsiCo Group shall be permitted with the consent of
the Affiliated Transaction Committee (or, if such Committee shall not be in
existence, by a committee of the Board composed entirely of Independent
Directors), which consent shall not be unreasonably withheld.
Section 3.8. SPECIAL MEETINGS REQUESTED BY THE SHAREHOLDER;
NOMINATIONS. In the event that during the term of this Agreement the
Shareholder Group requests a special meeting of the stockholders of the Company
in accordance with the By-Laws, or the Shareholder Group nominates an
alternative slate of directors to the slate proposed by the Board at any annual
meeting of stockholders of the Company in accordance with the By-Laws, the
Company hereby agrees that the Company shall not, without the Shareholders'
consent, from the date of receipt of such request for a special meeting or the
date of receipt of such nomination, as the case may be, until the adjournment of
the requested special meeting
H-8
<PAGE>
or the annual meeting, as the case may be, (i) take any action effecting a
material change in its capital structure, (ii) declare or pay a dividend (other
than any regular quarterly dividend), (iii) materially increase the compensation
of any executive officer or (iv) take any material action not in the ordinary
course of business; PROVIDED that this provision shall not restrict the ability
of the Company to comply with commitments entered into prior to the date of such
request.
Section 3.9. OPTIONS. The Company shall not grant to any member of the
Shareholder Group any options to purchase Common Stock unless such grant is
approved by the Affiliated Transaction Committee (or, if such Committee shall
not be in existence, by a committee of the Board composed entirely of
Independent Directors).
ARTICLE IV
BOARD COMPOSITION; CHIEF EXECUTIVE
Section 4.1. BOARD COMPOSITION; CHIEF EXECUTIVE. (a) As of the Effective
Time (as defined in the Merger Agreement) of the Merger, the Board shall consist
of the current directors of the Company and Robert Pohlad.
(b) Immediately following the Effective Time, Robert Pohlad shall be elected
Chief Executive Officer of the Company by the Board.
ARTICLE V
EFFECTIVENESS AND TERMINATION
Section 5.1. EFFECTIVENESS. This Agreement shall take effect immediately
upon the Closing and shall remain in effect until it is terminated pursuant to
Section 5.2 hereof.
Section 5.2. TERMINATION. This Agreement shall terminate upon written
agreement of the Company (which shall require the approval of the Affiliated
Transaction Committee (or, if such Committee shall not be in existence, by a
committee of the Board composed entirely of Independent Directors)) and the
Shareholders at any time to terminate this Agreement, which termination shall
occur at a time to be fixed in such mutual agreement.
ARTICLE VI
MISCELLANEOUS
Section 6.1. INJUNCTIVE RELIEF. Each party hereto acknowledges that it
would be impossible to determine the amount of damages that would result from
any breach of any of the provisions of this Agreement and that the remedy at law
for any breach, or threatened breach, of any of such provisions would likely be
inadequate and, accordingly, agrees that each other party shall, in addition to
any other rights or remedies which it may have, be entitled to seek such
equitable and injunctive relief as may be available from any court of competent
jurisdiction to compel specific performance of, or restrain any party from
violating, any of such provisions. In connection with any action or proceeding
for injunctive relief, each party hereto hereby waives the claim or defense that
a remedy at law alone is adequate and agrees, to the maximum extent permitted by
law, to have each provision of this Agreement specifically enforced against him
or it, without the necessity of posting bond or other security against him or
it, and consents to the entry of injunctive relief against him or it enjoining
or restraining any breach or threatened breach of such provisions of this
Agreement.
Section 6.2. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon,
shall inure to the benefit of and shall be enforceable by the Company and by the
Shareholders and their respective successors and permitted assigns, and no such
term or provision is for the benefit of, or intended to create any obligations
to, any other Person.
H-9
<PAGE>
Section 6.3. AMENDMENTS; WAIVER. (a) This Agreement may be amended only by
an agreement in writing executed by the parties hereto. Any approval of an
amendment of this Agreement upon the part of the Company shall require the
approval of the Affiliated Transaction Committee (or, if such Committee shall
not be in existence, by a committee of the Board composed entirely of
Independent Directors) at a duly convened meeting thereof.
(b) Either party may waive in whole or in part any benefit or right provided
to it under this Agreement, such waiver being effective only if contained in a
writing executed by the waiving party. No failure by any party to insist upon
the strict performance of any covenant, duty, agreement or condition of this
Agreement or to exercise any right or remedy consequent upon breach thereof
shall constitute a waiver of any such breach or of any other covenant, duty,
agreement or condition, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such right
accruing to it thereafter. Any waiver of any benefit or right provided to the
Company under this Agreement shall require the approval of a majority of the
Board and approval of the Affiliated Transaction Committee (or, if such
Committee shall not be in existence, by a committee of the Board composed
entirely of Independent Directors) at a duly convened meeting thereof.
Section 6.4. NOTICES. Except as otherwise provided in this Agreement, all
notices, requests, claims, demands, waivers and other communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
by hand, when delivered personally or by courier, three days after being
deposited in the mail (registered or certified mail, postage prepaid, return
receipt requested), or when received by facsimile transmission if promptly
confirmed by one of the foregoing means, as follows:
If to the Shareholders:
Pohlad Companies
Suite 3800
60 South 6th Street
Minneapolis, MN 55402
Attention: Robert C. Pohlad
Fax: (612) 661-3825
with a copy to:
Briggs & Morgan, P.A.
2400 IDS Center
Minneapolis, MN 55402
Attention: Brian D. Wenger
Fax: (612) 334-8650
If to the Company:
Whitman Corporation
3501 Algonquin Road
Rolling Meadows, Illinois 60008
Attention: General Counsel
Fax: (847) 818-5029
H-10
<PAGE>
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: Seth A. Kaplan
Fax: (212) 403-2000
or to such other address or facsimile number as either party may, from time to
time, designate in a written notice given in a like manner.
Section 6.5. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware without
giving effect to principles of conflicts of law.
Section 6.6. HEADINGS. The descriptive headings of the several sections in
this Agreement are for convenience only and do not constitute a part of this
Agreement and shall not be deemed to limit or affect in any way the meaning or
interpretation of this Agreement.
Section 6.7. INTEGRATION. This Agreement and the other writings referred
to herein or delivered pursuant hereto which form a part hereof contain the
entire understanding of the parties with respect to its subject matter. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to its subject matter. There are no restrictions, agreements,
promises, representations, warranties, covenants or undertakings with respect to
its subject matter other than those expressly set forth or referred to herein.
Section 6.8. SEVERABILITY. If any term or provision of this Agreement or
any application thereof shall be declared or held invalid, illegal or
unenforceable, in whole or in part, whether generally or in any particular
jurisdiction, such provision shall be deemed amended to the extent, but only to
the extent, necessary to cure such invalidity, illegality or unenforceability,
and the validity, legality and enforceability of the remaining provisions, both
generally and in every other jurisdiction, shall not in any way be affected or
impaired thereby.
Section 6.9. CONSENT TO JURISDICTION. In connection with any suit, claim,
action or proceeding arising out of this Agreement, the Shareholder and the
Company each hereby consent to the in personam jurisdiction of the United States
federal courts and state courts located in the State of Delaware; the
Shareholders and the Company each agree that service in the manner set forth in
Section 6.4 hereof shall be valid and sufficient for all purposes; and the
Shareholders and the Company each agree to, and irrevocably waive any objection
based on forum non conveniens or venue not to, appear in any United States
federal court or state court located in the State of Delaware.
Section 6.10. COUNTERPARTS. This Agreement may be executed by the parties
hereto in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
H-11
<PAGE>
IN WITNESS WHEREOF, the Company and the Shareholders have caused this
Agreement to be duly executed by their respective authorized officers as of the
date set forth at the head of this Agreement.
<TABLE>
<S> <C> <C>
WHITMAN CORPORATION
By:
-----------------------------------------
Name:
Title:
POHLAD COMPANIES
By:
-----------------------------------------
Name:
Title:
DAKOTA HOLDINGS, LLC
By:
-----------------------------------------
Name:
Title:
ROBERT POHLAD (on behalf of all members of the
Shareholder Group other than Pohlad Companies
and Dakota Holdings)
---------------------------------------------
</TABLE>
H-12
<PAGE>
PART II--INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware permits
indemnification of directors, officers, employees and agents of corporations
under certain conditions and subject to certain limitations. Article V of the
Registrant's bylaws provides for indemnification of any director, officer,
employee or agent of the Registrant, or any person serving in the same capacity
in any other enterprise at the request of the Registrant, under certain
circumstances. Article NINTH of the Registrant's Certificate of Incorporation
eliminates the liability of directors of the Registrant under certain
circumstances for breaches of fiduciary duty to the Registrant and its
shareholders.
Directors and officers of the Registrant are insured, at the expense of the
Registrant, against certain liabilities which might arise out of their
employment and which might not be subject to indemnification under the bylaws.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
--------------------- ------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of August 18, 2000,
among Whitman Corporation, Anchor Merger Sub, Inc. and
PepsiAmericas Inc., attached as Annex A to the joint proxy
statement/prospectus which is part of this registration
statement.
4.1 Certificate of Incorporation of Whitman Corporation, as
amended and restated on May 20, 1999, is hereby incorporated
by reference to Exhibit 3a to Whitman's Quarterly Report on
Form 10-Q for the quarterly period ended July 3, 1999
(commission file number 1-15019).
4.2 Bylaws of Whitman Corporation, as amended and restated on
May 20, 1999, are hereby incorporated by reference to
Exhibit 3b to Whitman Corporation's Quarterly Report on
Form 10-Q for the quarterly period ended July 3, 1999
(commission file number 1-15019).
4.3 Rights Agreement, dated as of May 20, 1999, between Whitman
Corporation and First Chicago Trust Company of New York
("Rights Agreement"), is hereby incorporated by reference to
Exhibit 4 to the Registration Statement on Form 8-A filed by
Whitman Corporation with the Commission on May 25, 1999
(commission file number 1-15019).
4.4 Amendment to Rights Agreement, dated as of August 18, 2000.
5.1* Opinion of Steven R. Andrews, Esq., as to the legality of
the securities being registered.
8.1* Opinion of Sidley & Austin regarding certain U.S. income tax
aspects of the merger.
8.2* Opinion of Briggs and Morgan, P.A. regarding certain U.S.
income tax aspects of the merger.
10.1 Voting Agreement, dated as of August 18, 2000, between
PepsiCo and PepsiAmericas, is hereby incorporated by
reference to Exhibit 99.2 to Whitman Corporation's Current
Report on Form 8-K filed with the Commission on August 23,
2000.
10.2 Voting Agreement, dated as of August 18, 2000 between Dakota
Holdings and Whitman Corporation, is hereby incorporated by
reference to Exhibit 99.1 to Whitman Corporation's Current
Report on Form 8-K filed with the Commission on August 23,
2000.
23.1* Consent of Steven R. Andrews, Esq. (included in Exhibit 5.1
hereto).
23.2 Consent of KPMG LLP.
23.3 Consent of Arthur Andersen LLP.
23.4* Consent of Sidley & Austin (included in Exhibit 8.1 hereto).
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
--------------------- ------------------------------------------------------------
<C> <S>
23.5* Consent of Briggs and Morgan, P.A. (included in Exhibit 8.2
hereto).
24.1 Power of Attorney of directors of Whitman Corporation.
99.1 Opinion of Credit Suisse First Boston Corporation, attached
as Annex B to the joint proxy statement/prospectus which is
part of this registration statement.
99.2 Opinion of Salomon Smith Barney Inc., attached as Annex C to
the joint proxy statement/ prospectus which is part of this
registration statement.
99.3 Opinion of Chase Securities Inc., attached as Annex D to the
joint proxy statement/prospectus which is a part of this
registration statement.
99.4 Consent of Credit Suisse First Boston Corporation.
99.5 Consent of Salomon Smith Barney.
99.6 Form of Consent of Chase Securities Inc.
99.7 Form of Proxy for Special Meeting of Shareholders of Whitman
Corporation.
99.8 Form of Proxy for Special Meeting of Shareholders of
PepsiAmericas, Inc.
99.9 Consent of Robert C. Pohlad to be named a director of
Whitman Corporation.
</TABLE>
------------------------
* To be filed by amendment.
(b) Financial Statement Schedules.
None.
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment hereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Securities and Exchange Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
II-2
<PAGE>
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder, through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c) of
the Securities Act of 1933, the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(c) The undersigned Registrant hereby undertakes that every prospectus:
(i) that is filed pursuant to the immediately preceding paragraph, or (ii) that
purports to meet the requirements of Section 10(a)(3) of the Securities Act of
1933, and is used in connection with an offering of securities subject to
Rule 415, will be filed as a part of an amendment to the registration statement
and will not be used until such amendment is effective, and that, for purposes
of determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933, may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933, and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933, and will be governed by the final adjudication of such
issue.
(e) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(f) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.
(g) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Rolling
Meadows, State of Illinois, on September 21, 2000.
<TABLE>
<S> <C> <C>
WHITMAN CORPORATION
By: /s/ BRUCE S. CHELBERG
-----------------------------------------
Bruce S. Chelberg
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ BRUCE S. CHELBERG Chairman of the Board and Chief
------------------------------------ Executive Officer and Director September 21, 2000
Bruce S. Chelberg (principal executive officer)
/s/ MARTIN M. ELLEN Senior Vice President and Chief
------------------------------------ Financial Officer (principal September 21, 2000
Martin M. Ellen financial and accounting officer)
*
------------------------------------ Director September 21, 2000
Herbert M. Baum
*
------------------------------------ Director September 21, 2000
Richard G. Cline
*
------------------------------------ Director September 21, 2000
Pierre S. du Pont
*
------------------------------------ Director September 21, 2000
Archie R. Dykes
*
------------------------------------ Director September 21, 2000
Charles W. Gaillard
*
------------------------------------ Director September 21, 2000
Jarobin Gilbert, Jr.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
*
------------------------------------ Director September 21, 2000
Victoria B. Jackson
*
------------------------------------ Director September 21, 2000
Robert F. Sharpe, Jr.
*
------------------------------------ Director September 21, 2000
Karl M. von der Heyden
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ MARTIN M. ELLEN
-------------------------------
Martin M. Ellen
ATTORNEY-IN-FACT
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
--------------------- ------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of August 18, 2000,
among Whitman Corporation, Anchor Merger Sub, Inc. and
PepsiAmericas Inc., attached as Annex A to the joint proxy
statement/prospectus which is part of this registration
statement.
4.1 Certificate of Incorporation of Whitman Corporation, as
amended and restated on May 20, 1999, is hereby incorporated
by reference to Exhibit 3a to Whitman's Quarterly Report on
Form 10-Q for the quarterly period ended July 3, 1999
(commission file number 1-15019).
4.2 Bylaws of Whitman Corporation, as amended and restated on
May 20, 1999, are hereby incorporated by reference to
Exhibit 3b to Whitman Corporation's Quarterly Report on
Form 10-Q for the quarterly period ended July 3, 1999
(commission file number 1-15019).
4.3 Rights Agreement, dated as of May 20, 1999, between Whitman
Corporation and First Chicago Trust Company of New York
("Rights Agreement"), is hereby incorporated by reference to
Exhibit 4 to the Registration Statement on Form 8-A filed by
Whitman Corporation with the Commission on May 25, 1999
(commission file number 1-15019).
4.4 Amendment to Rights Agreement, dated as of August 18, 2000.
5.1* Opinion of Steven R. Andrews, Esq., as to the legality of
the securities being registered.
8.1* Opinion of Sidley & Austin regarding certain U.S. income tax
aspects of the merger.
8.2* Opinion of Briggs and Morgan, P.A. regarding certain U.S.
income tax aspects of the merger.
10.1 Voting Agreement, dated as of August 18, 2000, between
PepsiCo and PepsiAmericas, is hereby incorporated by
reference to Exhibit 99.2 to Whitman Corporation's Current
Report on Form 8-K filed with the Commission on August 23,
2000.
10.2 Voting Agreement, dated as of August 18, 2000 between Dakota
Holdings and Whitman Corporation, is hereby incorporated by
reference to Exhibit 99.1 to Whitman Corporation's Current
Report on Form 8-K filed with the Commission on August 23,
2000.
23.1* Consent of Steven R. Andrews, Esq. (included in Exhibit 5.1
hereto).
23.2 Consent of KPMG LLP.
23.3 Consent of Arthur Andersen LLP.
23.4* Consent of Sidley & Austin (included in Exhibit 8.1 hereto).
23.5* Consent of Briggs and Morgan, P.A. (included in Exhibit 8.2
hereto).
24.1 Power of Attorney of directors of Whitman Corporation.
99.1 Opinion of Credit Suisse First Boston Corporation, attached
as Annex B to the joint proxy statement/prospectus which is
part of this registration statement.
99.2 Opinion of Salomon Smith Barney Inc., attached as Annex C to
the joint proxy statement/ prospectus which is part of this
registration statement.
99.3 Opinion of Chase Securities Inc., attached as Annex D to the
joint proxy statement/prospectus which is a part of this
registration statement.
99.4 Consent of Credit Suisse First Boston Corporation.
99.5 Consent of Salomon Smith Barney.
99.6 Form of Consent of Chase Securities Inc.
99.7 Form of Proxy for Special Meeting of Shareholders of Whitman
Corporation.
99.8 Form of Proxy for Special Meeting of Shareholders of
PepsiAmericas, Inc.
99.9 Consent of Robert C. Pohlad to be named a director of
Whitman Corporation.
</TABLE>
------------------------
* To be filed by amendment.
